Crypto lender Celsius stung by sell-off in digital asset market
Crypto lender Celsius Network has suffered a 50% decline in the value of assets deposited on its platform this year, a sign of the pressure the industry is facing following falling digital token prices.
Celsius, which borrows cryptocurrencies from clients and lends them to earn a return, had just under $12 billion in assets as of May 17, according to its website, compared to more than $24 billion at the end of May. December 2021.
The company is one of the biggest players in the crypto lending industry and claims to have 1.7 million customers. Last year he raised $750 million investors, including the second-largest pension fund in Canada, the Caisse de dépôt et placement du Québec.
Crypto lending has exploded in recent years, alongside the broader crypto market. With prices now falling, companies with billions in customer deposits like Celsius face the challenge of navigating a crypto market meltdown.
Alex Mashinsky, who founded and runs Celsius, sought to reassure clients this month after the collapse of a major stablecoin called terraUSD along with its sister token Luna rattled confidence and hit prices in crypto markets. . He said on Thursday that the group had “minimal exposure” to the tokens.
I understand that people trying to sell you competing services are spreading these rumours, but you should trust our @Twitter posts.
— Alex Mashinsky (@Mashinsky) May 19, 2022
Celsius has suffered significant customer outflows in recent months, including $750 million between May 6 and May 14, according to weekly statistics released by the company. Since March, net outflows have amounted to more than $1.1 billion.
The drop in assets at Celsius was mostly a reflection of falling prices in crypto markets, according to a person familiar with the matter. They added that the company has billions of dollars in liquidity and provides customers with the funds they need.
Celsius’ own coin called CEL is trading at just 80 cents, down from a peak of $8 in June 2021. The group is the token’s largest holder and includes it as an asset on its balance sheet, according to accounts filed in the Kingdom. -United.
As part of its efforts to attract new client funds, the company launched a promotion on Tuesday offering clients rewards if they transfer assets to Celsius accounts and keep them there for up to 180 days. A spokesperson for Celsius said it offers promotions regularly and its promotion strategy has not changed recently.
Earlier this week, Celsius also said it had filed with US securities regulators to list its bitcoin mining subsidiary on Wall Street stock exchanges.
Celsius generates revenue in part through “discretionary trading” in cryptocurrencies, including “speculative trading” on price, according to its accounts in the UK. Mashinsky insisted the company does not trade customer assets. “The way we earn yield doesn’t involve trading the asset itself,” he told the Financial Times last year.
Celsius is one of many crypto firms offering clients interest in their digital assets and advertising returns as high as 18.6%. It has come under intense scrutiny from regulators in some jurisdictions who argue that these products should be registered as securities.
Last month, Celsius barred non-accredited U.S. investors — people with an annual income of less than $200,000 or a net worth of less than $1 million — from earning rewards on the company’s Earn platform.
Celsius shareholders include Tether, the stablecoin issuer whose eponymous token, also known as USDT, traded below its $1 peg earlier this month. Celsius borrows USDT directly from Tether under a facility that requires it to post bitcoin as collateral.
Last year, the company’s chief financial officer was arrested in Israel in connection with an investigation unrelated to Celsius. He has denied wrongdoing and has not been charged.
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