Celsius in the red: Citigroup bank comes to the rescue of the crypto giant

TradFi, great savior of Celsius – After a freezing operations After causing a stir, the lending platform tries to get out of its predicament. Indeed, his bold stances on the digital asset steTH got him in trouble during the crash that have impacted the entire crypto ecosystem. Among other steps to get back up, Celsius has just obtained expert advice from the banking giant Citigroep

Citigroup brings not only financial support, but also strategic expertise to Celsius

The lending protocol therefore called for the traditional banking sector to help him get out of his bad patch. This isn’t about saving the treasury. Rather, the bank should play an advisory role with regard to the various possible sources of financing. In this context, Citigroep wants to help Celsius evaluate all the options that have appeared on the negotiating table. We are thinking, for example, of the competitor Nexo, which has officially approached its counterpart. When the liquidity problems arose, he offered to buy back some of his eligible assets (mainly his portfolio of secured loans).

Citigroup and Celsius are old allies† The bank is said to have already advised Celsius on various activities and on its IPO projects. The approach then was to disclose the activity of its bitcoin mining subsidiary. Indeed, the protocol still had recently the intention to be . to make IPO† In May, a confidential draft S-1 registration for the subsidiary’s IPO was even filed. A mandatory step for an in-depth investigation by the Securities and Exchange Commission (DRY)

The price drop has trapped users of the Celsius protocol

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A sequence of events that does not surprise crypto-sphere specialists

For Kaiko, a crypto research firm, Celsius drop is multifactorial† A report released on Wednesday points to a combination of poor risk management, bearish market conditions and overexposure to stETH (staked ether, an ether derivative that represents the V2 of ETH tokens). An explosive cocktail that has put the company in quite a position comparable to the tragic history of the bank Lehmann Brothersduring the subprime crisis.

“Even if it survives this ordeal, I don’t see how anyone can trust people like Celsius to keep their assets safe in the future. †

Conor Ryder, Analyst at Kaiko

Conscious of legal turmoil waiting for him, Celsius also hired the firm’s lawyers a little earlier in the week Akin Gump Strauss Hauer & Feld LLPa team specialized in restructuring debt and insolvency management. An approach that can be a sign of goodwill or a strategy of resistance, depending on whether you want to see the glass half full or half empty.

Whatever the outcome of this case, cryptophiles are adept at it DeFi Stamped Protocols will leave for a good lesson. Indeed, the increase in setbacks currently afflicting some of the crypto ecosystem’s giants shows that the human factor remains the weak link of blockchain technology. In the future, investors will no doubt be more likely to ask the right questions to truly understand how the returns paid to them are generated. Perhaps they will finally become the responsible and invested users who will proactively decide which platforms are reliable and which are not.

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