Crypto lending platform Celsius has announced that it is pausing all customer withdrawals, clearing and transfers. Three days later, Alex Mashinsky, CEO of the besieged company, finally broke his silence on the matter. However, Mashinsky did not give much comfort to those who were waiting for an answer as to when users can withdraw funds again. As it is known, Celsius was exposed to a depeg event. After that, he started to face a great liquidation risk. After the events, altcoins such as BTC, SHIB and ETH began to fall. We have compiled the details for you.
The CEO of Celsius, who caused the collapse of BTC and SHIB, spoke for the first time
BTC, SHIB and ETH prices fell on Sunday due to Celsius, as we reported on Cryptokoin.com. Mashinsky took to Twitter this afternoon to speak publicly for the first time since his company freezed withdrawals Sunday night. Accordingly, the CEO assured the Celsius community that the company’s team is working “non-stop” on this issue. It also demanded customers to be more patient.
“The Celsius team is working non-stop. We’ve focused on your concerns and are grateful to hear from so many people. Seeing you come together is a clear sign that our community is the strongest in the world. This is a difficult moment; your patience and support means the world to us.”
Mashinsky in particular gave no answer as to when he intended or expects Celsius to work again. Twitter users soon begged the embattled CEO for commitments to deposit safety. However, Mashinsky did not respond any further.
“Please don’t let me down, I don’t mind waiting, I had 45 Ethereums saved for my new home. I’m crying and praying to God that I can get that money. It took me 4 years to save and I worked 100 hours a week for it, I can’t sleep.”
It all started with stETH depeg
stETH, which was offered on the platform, started to lose its stability to ETH. After that, Celsius paused withdrawals on Sunday to “stabilize liquidity” and “protect assets”. The stETH, which represents the locked Ethereum in the Ethereum 2.0 token chain, was supposed to be pegged to the value of ETH. For this reason, stETH was often used as collateral on platforms like Celsius to borrow ETH.
However, with the crypto crash, stETH lost its grip against the highly volatile ETH. For customers to withdraw ETH, Celsius would sell stETH markets. However, a large number of customers who are concerned about the recent depeg may decide to withdraw. Such an event would force Celsius to sell large portions of its $472 million stETH supply. This will further reduce the price of stETH. This will leave the company with insufficient liquidity to cover its customers’ ETH transactions. Accordingly, Celsius is a candidate to go bankrupt and become the second Terra case. As a result, BTC and SHIB may suffer further losses.
It is unknown how to fix the issue that crashed SHIB and BTC
It remains unclear how Celsius will fix the issue if stETH loses its stability to ETH any more. At the time of writing, stETH corresponds to 0.93 of ETH, which should be 1:1. Additionally, the company reportedly hires attorneys for restructuring if other sources of funding cannot be found. The platform’s crypto dropped 70% in an hour after Celsius suspended withdrawals. Just a day ago Mashinsky was criticizing a Twitter user for spreading ‘fear, uncertainty and doubt’:
“Mike, do you even know a person with a Celsius withdrawal problem? Why was FUD and misinformation spread? If you’re getting paid for it, then let everyone know you’ve chosen sides. Otherwise our job will be to fight together with Tradfi…”
The situation seems to have taken the Celsius leadership by surprise. It also remains unclear when a plan to fix this will be made public. As it is known, after the event, SHIB, Bitcoin and ETH fell.
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