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Celsius Appears insolvent, and it's taking the whole crypto market with it
- Jasonrams 4y ago
- mindracer 4y agohttps://threadreaderapp.com/thread/1536476104986267648.html https://threadreaderapp.com/thread/1536476104986267648.html
- quickthrower2 4y agoCelsius has had a chilling effect on the crypto market.
- kfarr 4y agoI hear Fahrenheit is on fire though
- evv 4y agoMy friend Kelvin says crypto is going to absolute zero.
- eqvinox 4y agoThere's gonna be a lot of buyer's Réaumur-se around...
- naedish 4y agoI see what you did there but for me at least it's not Rankine.
- qxmat 4y agoMakes my blood boyle
- ivankelly 4y agogutness me, Ich needen ein stein of Doppelbock to get throu zis
- quickthrower2 4y agoI love it when HN occasionally reddits
- dharma1 4y agoCelsius plummets as crypto Winter is marching in. Tomorrow in Web3 you can expect strong headwinds, with a low of -99 Celsius. Watch out for those cold showers as liquidation cascades mount and a damp, chilly mood will be in charge. But it’s not all doom and gloom - while we may test record lows, the long term outlook remains sunny for 2023 and beyond.
- jazzyjackson 4y agoMy favorite part of this is that because their reserves are illiquid, Celsius is forced to take out loans from other exchanges in order to pay out withdrawals. Each of these transactions/bailouts was visible on the blockchain and immediately called out on Twitter, accelerating withdrawals. A run on the exchange. If one major exchange goes bust and people learn that they have no recourse to recover funds, expect to see people pulling money out of other exchanges.
- hdjjhhvvhga 4y ago> Each of these transactions/bailouts was visible on the blockchain and immediately called out on Twitter, accelerating withdrawals. Well, they could have used Monero.
- deleted 4y ago[deleted]
- cm2187 4y agoIt is so amusing to see crypto redoing 100 years of financial scandals at accelerated pace: mass money laundering, ponzi schemes, non separation of client and firm money by brokers, market manipulation, inability to sustain a “bank”run, misleading marketing material sold to retail investors. This is something fascinating for a finance professional. The paradox being that crypto is proving the benefits of heavy financial regulation by showing us a world without financial regulation (and I am talking as someone who has to deal with banking regulation and think the current massive amount of regulations is ridiculous and kills competition).
- thetis 4y agoand don't forget the "i lost my bitcoin password so i lost all my assets" and "my hard drive has been destroyed so i lost all my bitcoins" All those stories were solved across 120y of crisis and financials regulations. Not all of course, but finance, as a basis of the XXI century economy is far more robust that it was
- datalopers 4y agoThe crypto market is crashing for the same reason real financial markets are crashing. The problems with Celsius are an irrelevant blip.
- suzzer99 4y agoExcept the real financial markets have a bottom where contrarian investors will step in and stop the free fall. What tangible value is there for a contrarian investor in crypto?
- junofan 4y agoUnder proof-of-stake, if I control some fraction of the network, perhaps statistically I’ll occasionally be able to profit from doing things the network designers didn’t think of. So I’d want to buy during a sell-off to maximize my profits.
- CTDOCodebases 4y agoIs there something like MEV with PoS?
- viraptor 4y agoSame as before - hope the price is low enough and starts rising for the same reasons it was rising years ago.
- arka2147483647 4y agoReal markets, or the companies within, make something that people need. They have equipment, customers, etc. Maybe they are important enough that the state has to bail them out. Maybe they get restructured or merged. Anyways, there is some kind of floor to which they can fall, and which will catch them. What kind of "floor" is there for crypto? By definition it is not tied to anything non digital? Right?
- 4y ago
- rplnt 4y agoReddit thread warning about this 2 weeks ago. Not everyone agreed. https://old.reddit.com/r/CryptoCurrency/comments/v29t59/celsius_is_insolvent_please_get_your_funds_out_now/ https://old.reddit.com/r/CryptoCurrency/comments/v29t59/cels...
- bilekas 4y agoyou could be talking about the sky being blue during the day and not everyone would agree on reddit. But crypto discussions on Reddit are just ridiculous. You do get some good nugets like OP's but for the most part it's a group of cryto bros pushing their own exposure.
- avinassh 4y agoModerators seem to deleting all new comments on this Reddit post
- greenpresident 4y agoIt was linked on the Dramaverse and got brigaded. The thread was a couple of days old so it was easy to tell who got linked from outside.
- sph 4y agoWTF is the Dramaverse? My search engine isn't helping.
- thematrixturtle 4y agohttps://www.reddit.com/r/SubredditDrama/comments/vbhb9v/concerned_cryptobro_tries_to_warn_rcryptocurrency/ https://www.reddit.com/r/SubredditDrama/comments/vbhb9v/conc...
- willcipriano 4y agoSo this is how Reddit manufactures consent, fun.
- Deritio 4y agoOh boy oh boy that thread had lots of ETH and sETH and oETH und BTC and what not. No wonder that it's hard for some people to see the Ponzi schemes, pyramid schemes and what else those things are called. Regulations anyone? Or do we now just see people loosing their money?
- zamalek 4y agoCrypto has become a gacha game. So many currencies that you lose contact with how much money you put in in the first place.
- YeBanKo 4y agoWith regulations people will be loosing their money anyway, but with confidence, because they will have a sense of some legitimacy. The only regulations crypto needs is how to call things. Just like whatever Tesla has should not be called Autopilot, crypto prophets should not be allowed to call it investment. Call it gambling and off you go.
- ImaCake 4y agoMy inability to understand these financial instruments without hours of study is why I never put money into anything other than a couple of major currencies for funsies. Vanguard ETFs, mortgages, and bank accounts make sense. So I keep serious money in those.
- dehrmann 4y ago> bank accounts I'd argue it's hard to understand the higher-order effects of fractional reserve banking. The accounts are at least backed by a government and have over 100 years of lessons baked into them, so that's something.
- Taniwha 4y agoit was never really 'money', or even 'theirs' - just a consensual delusion that's falling apart
- 4y ago
- trhway 4y agoWho said doublespent is impossible? Innovating your way out of such a limitation : "$stETH is a product by @LidoFinance. It stands for (liquid) staked $ETH and it's one of the most innovative DeFi products to be released in the last few years. $stETH can also be used to earn MORE yield than otherwise possible with vanilla $ETH. Why? Because while $stETH already earns staking yield, it can also be lent out or liquidity provisioned."
- pas 4y agoit's the derivative bubble all again or more precisely using collateral that's already beind used for collateral for something else. see also rehypothecation
- glerk 4y agoThis is not double-spend. You are spending your ETH to buy a token. This token can be converted back to ETH (plus some interest) at a later date. In the meanwhile, you can do anything you want with this token: trade it, spend it, stake it on another platform, etc. But if you don’t bring it back, you are not getting back that ETH that you originally spent.
- trhway 4y agoDoesn't that token represent staked ETH, ie. ETH which nothing can be done with, ie. no "trade it, spend it, stake it on another platform, etc. " ? Now, you take that new token, exchange into new ETH, stake that new ETH, and get again that new token, ad infinitum, every time increasing your staked ETH amount and thus accruing stake yield of that multiplied staked ETH ... One would naturally expect that a system allowing for such things to happen simply must undergo "Rapid Unplanned Disassembly" at some point.
- glerk 4y ago> Now, you take that new token, exchange into new ETH You can only exchange it back into ETH after the lock period is over. Sure, you can buy ETH from someone else in exchange for this token, but you will pay a premium for that: obviously, people prefer ETH to some token that can be exchanged for ETH in the future and there is not an infinite supply of ETH available to be sold for this token. So no, you can’t just increase your ETH ad infinitum. At each iteration of the loop, your amount of tokens will decrease until you have none left.
- silisili 4y agoDoes anyone have any inkling about Voyager? I only ask because when I was looking into it last year, seemed everyone said 'use Celsius or Voyager', so I assume they are somewhat similar. I used Voyager to get 9% APY on USDC just to test it, but chickened out and withdrew it all because I basically envisioned something like this happening.
- pas 4y agowhat was the the business model of these platforms? did they lend out the staked money, or how did they generate these yields?
- CTDOCodebases 4y agoThe business model of Celsius was loan USD to people and earn interest. The loans were overcollateralised with the users Bitcoin. The problem is Celsius wasn’t content with just earning interest from loaning money so they invested their users Bitcoin in crypto projects that ended up going pear shaped.
- silisili 4y agoI have zero idea. I did get the correct APY for one month before withdrawing, paid no fee, and was left with the same question.
- imustbeevil 4y agoThey may have a whitepaper or something, but the simplest way to generate higher returns in a bull market is just to use leverage. I can sell you an ETF that returns 2x the NASDAQ, and use the money to buy a 3x and pocket the difference. It looks like I'm giving you a better return than the NASDAQ, but when the market goes down everything obviously collapses because it's only designed to work in one direction. Of course, that sounds stupid as hell and you'd certainly hope that someone thought of something better, but this is exactly what happened with Terra/LUNA, except with more financial engineering to obfuscate the "if it goes down 25% we're fucked".
- puranjay 4y agoThey're done. Even if they're not insolvent, the moment they enable withdrawals, everyone will cash out. There's no new money entering this space anyway. Without customer deposits, they're toast as a business.
- dkrich 4y agoThey were assuring customers of their stability, let’s see, six days ago: https://blog.celsius.network/damn-the-torpedoes-full-speed-ahead-4123847832af https://blog.celsius.network/damn-the-torpedoes-full-speed-a... Surely there are going to be criminal charges forthcoming. Doing everything they can to prevent people withdrawing up to and including blatantly lying. If history is any guide this isn’t close to over yet.
- janmo 4y agoOne day before the halting of the withdrawals the CEO of Celsius was bragging that they were "winning". https://twitter.com/ClarityToast/status/1536185339643105280 https://twitter.com/ClarityToast/status/1536185339643105280
- mdrzn 4y agoLatest Coffeezilla video's about it recaps it very nicely: https://www.youtube.com/watch?v=d5ll3ByaoHE https://www.youtube.com/watch?v=d5ll3ByaoHE
- tarsinge 4y agoRegarding the investment part (not the marketing or insurances obv.) how is that different from what an investment bank does when it invest in long term products? If the funds are in e.g. long term bonds, real estate, mortgages... the investors can't get back all of their money all at once, it will take years to mature, also the capital they are required to hold are only a few percent, so they are also technically insolvent right? Genuinely asking.
- zebogen 4y agoI think it is similar in that it is possible for a fund to become insolvent, but consumers are protected by the Investment Company Act of 1940. This requires the companies that run mutual funds to rely on a custodian bank to hold their assets. This way, if the fund does go bankrupt, the company operating it cannot access them to ensure that investors are paid out instead of being rug pulled. It limits the amount of leverage the fund can have, requires them to maintain a cash buffer, and required them to report regularly on their financial condition. Fraud is still possible, of course, but consumers have WAY more protections with fiat investments. https://www.sec.gov/investment/laws-and-rules https://www.sec.gov/investment/laws-and-rules
- tarsinge 4y agoSure I understand regarding the protections. But regarding the nature of the investments by themselves in don't find the difference meaningful enough to earn the label "truly degenerate trading strategies with investor funds." compared with what we currently see in non-crypto Finance, which is equally degenerate for me in that case.
- CaptainZapp 4y agoI think the major difference is that such investments are usually in substantial assets. Something that definitely can't be said of some of those fantasy funny coins.
- tarsinge 4y agoIn theory maybe, in practice I don't find speculation on financial products any more substantial, like stocks where they are not owned with aims regarding dividends or the governance of the company (which is the point of a stock) but only to be unloaded on someone in the future at a higher price. The nature of the token doesn't matter in that case only the sentiments of other traders.
- ricardobeat 4y agoOne of the “largest crypto gateways”, of which most people have never heard before, has almost 1B in VC funding, custodied only 3x that and somehow made themselves insolvent. Why am I not surprised?
- janmo 4y agoI had been warning about Celsius for months, in fact I even published this blog post last year: https://rorodi.substack.com/p/the-biggest-crypto-lending-company https://rorodi.substack.com/p/the-biggest-crypto-lending-com... Also posted it here on HN but it did not get much traction. What really baffles me is that major VCs have put hundreds of millions into what pretty much every one who has watched one or two episodes of "American Greed", would immediately recognise as being a ponzi scheme. I e-mailed the regulators, the VCs etc... They did nothing, and now it is too late.
- xtracto 4y agoA friend warned me about them back a year ago: https://www.coindesk.com/business/2021/06/24/custodian-prime-trust-cuts-ties-with-crypto-lender-celsius/ https://www.coindesk.com/business/2021/06/24/custodian-prime...
- GoodJokes 4y ago
- epmatsw 4y agoSeems like the common thread in these failures is outsized “guaranteed” returns. Are there other large systems or companies still paying out double digit rates now?
- basch 4y agohttps://defirate.com/lend/ https://defirate.com/lend/
- janmo 4y agoYes: Bitfinex, Crypto.com. Nexo, BlockFi, Ledn. I predict that they will all eventually collapse. It is a bit delayed with them because there is a locking period for most of them, this means that they will be in trouble in the coming days/weeks as they will have to honour massive withdrawals.
- 4y ago
- sbarbarian 4y agoOnce upon a time, the emperor had no clothes.