Key facts:
Celsius does not allow cryptocurrencies to be withdrawn from its platform, apparently due to lack of liquidity.
If it were to accept Nexo’s offer, Celsius customers would be able to dispose of their cryptocurrencies.
Nexo, a platform for loans collateralized with bitcoin (BTC) and cryptocurrencies, proposed to its competitor, Celsius Network, to buy part of the assets it manages. This would ensure that users of the latter company can remove them from the platform, if they so wish.
It should be remembered that, as CriptoNoticias released this morning, Celsius Network restricted withdrawals from the platform. Although they have not given explanations, It is very possible that it is due to a lack of liquidity.
Nexo’s offer was made known through the bidder himself, who on his Twitter account laid out details of the proposal: “Following what appears to be the insolvency of Celsius Network, and considering the repercussions for its retail investors and the cryptocurrency community, Nexo has extended a formal offer to acquire qualifying assets from Celsius Network after of the withdrawal freeze.
In the same statement, they allege that they operate a sustainable business “based on solid fundamentals and prudent risk management.” Therefore, they say, they “are in a strong liquidity and capital position, as evidenced by the only real-time reserve certification from a finance company” in the cryptocurrency industry.
The Nexo text indicates that the acquisition of accounts receivable “will go a long way to providing immediate liquidity to Celsius Network customers.”
Like Celsius Network, Nexo offers interest for depositing bitcoin and cryptocurrencies on the platform. In addition, these deposits can be used as collateral for borrowing.
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Nexo differs from Celsius in that the interest rate on loans is higher than that paid on deposits, what makes the business make good business sense. On the other hand, in Celsius, the rate to be paid for a loan is 1% annual interest, a figure considerably lower than the yields on deposits, which can reach up to 10%.
So far, according to information available online, Celsius has not responded to Nexo. This last company assured that it would inform by the same means in case of receiving a reply.
Celsius does not explain
Just as it has not responded to Nexo, the company Celsius Network has also not made any statement about the precise cause that led them to suspend the withdrawals.
As CriptoNoticias has inferred, the loss of parity of the stETH token with ether (ETH) could be one of the reasons. Also the general fall of the cryptocurrency market could have something to do with it. It is that Celsius was, in turn, a client of decentralized platforms such as MakerDAO in which he deposited bitcoin and other cryptoactives to obtain interest and these could be at risk of liquidation.
Who has also not expressed publicly about what happened is the CEO of Celsius Network, Alex Mashinsky. This Ukrainian-American businessman had repeatedly boasted that his company offered services that banks did not want to offer and that it provided loans at the best market rate. Apparently, as it now comes to light, their business model was not sustainable.