Celsius Calls on Citigroup for Options After Liquidity Squeeze
Celsius has enlisted Citigroup’s help in determining the next steps after suspending customer accounts on Sunday.
The Block revealed on Wednesday that the bitcoin lender had hired a traditional financial bank as an advisor. While Citigroup would not contribute funding directly to the crypto lender, it will outline prospective financing options, according to the article.
Citigroup would allegedly assist the project in evaluating proposals, including one from rival lender Nexo, which formally asked Celsius to acquire some of its troubled assets at the time Celsius was experiencing liquidity concerns.
Even before the lender officially admitted it, Nexo notified Blockworks it was aware of Celsius’s withdrawal issues and that its results pointed to the “unsustainability” of its operation.
According to Youwei Yang, director of financial analytics at StoneX, Celsius’ decision to halt customer withdrawals and transfers because to “extreme market conditions” caused a frightened crypto market sell-off reminiscent of Mt. Gox’s devastating bankruptcy in 2014. At the time, a breach at the Tokyo-based crypto exchange resulted in the loss of around 850,000 bitcoin, resulting in the firm’s demise.
The crypto lender suffered from a mix of poor risk management, unfavorable market circumstances, and overexposure to stETH, according to crypto research firm Kaiko, which put the firm into a “Lehman-esque” position.
“Even if they do survive this onslaught, I don’t see how anyone can trust the likes of Celsius to keep their assets safe going forward,” Conor Ryder, research analyst at Kaiko, wrote.
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