Cryptocurrency exchange FTX originally intended to help the Celsius lending platform but withdrew its decision after seeing their situation.
FTX refused to rescue Celsius
According to TheBlock’s source, billionaire Sam Bankman-Fried’s cryptocurrency exchange FTX has decided not to help Celsius, a crypto lending company struggling with liquidity.
Specifically, FTX initially considered investing in or buying back Celsius shares, similar to what they did with Voyager and BlockFi, but changed their mind when they learned of Celsius’ actual financial position. Sources claim Celsius is losing as much as $2 billion. FTX feels it can’t do anything about the situation.
As mentioned in previous Coincu News articles, Celsius’s current crisis is caused by the company’s illiquidity from holding too many stETH tokens, the locked-down version of ETH on the Lido staking platform. As the price of ETH fell and stETH sold off during mid-June, users rushed to withdraw from Celsius, making the situation increasingly dire.
In the latest post on June 20, Celsius stated that it is still in the process of counting and stabilizing the company’s liquidity and that “it will take more time”. The company also said it is in the process of talking with financial officials and regulators to find a solution. By June 25, Celsius is said to have hired more legal counsel to prepare for the case of having to declare bankruptcy. Celsius CEO Alex Mashinsky was accused last week of trying to flee the US, but this has been denied.
Billionaire Sam Bankman-Fried has, since the crisis, announced that he would “consider helping troubled projects” to prevent the domino effect from spreading. The companies under him, the investment fund Alameda Research and the exchange FTX, have loaned Voyager Digital and BlockFi $ 485 million and $ 250 million, respectively.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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