Investors should not hand up their Bitcoin to Celsius for rehypothecation, says Dennis Porter

Key Takeaways

  • The price of the CEL coin has dropped following the collapse of the Terra ecosystem last week, which put all major cryptocurrencies into a spiral. 
  • Celsius has reduced its savings rate this year in the light of bleak pessimism in the crypto and financial markets.
  • Friday’s loss was the smallest since September 2020, when it fell below $0.60. As a result, investors should thoroughly examine asset and market risks before considering crypto investments.
  • According to Dennis Porter, the company is on the verge of crumbling.

After this month’s stablecoin crash, the lender and deposit-taker of cryptocurrency, Celsius Network is under increasing strain.

On Monday morning, amid a larger market meltdown, Crypto Celsius (CEL) plummeted to its lowest level since September 2020. In the previous 24 hours, the price has dropped 12% and the volume has dropped 25%.

In the last 24 hours, the broader crypto market decreased 1.01 percent to $1.20 trillion, while volume increased 31.23 percent to $106.08 billion. Bitcoin (BTC) and Ethereum (ETH), respectively, were down 0.49 percent and 2.46 percent.

Celsius In Past 1 Year
Celsius in Past 1 Year

The $CEL token is used by Celsius to pay depositors of cryptoassets a higher rate of interest than if the interest were paid in the asset itself.

Clients moving the largest stablecoin Tether to Celsius, for example, can expect an annual percentage yield of up to 9.32 percent if paid in $CEL, compared to 7.1 percent if paid in Tether.

Celsius customers are not covered by any deposit insurance schemes and have a borrower/lender arrangement with the platform.

Celsius appears to be the only crypto company that has decided to open up a piece of its operations to the general public. Celsius Network, one of the world’s largest crypto lending companies, issued a press release on Monday announcing that its wholly-owned Bitcoin (BTC) mining subsidiary, Celsius Mining LLC, has filed a Form S-1 with the Securities and Exchange Commission (SEC) of the United States, indicating that it intends to go public.

In a recent tweet, @Dennis Porter_ highlighted his concerns about Celsius’s rehypothecation. He goes on to say that after seeing the CEO’s reaction to @mikealfred and @coryklippsten, he believes the company is on the edge of collapsing.

“Ive always been concerned about Celsius”

In a recent tweet, @Dennis Porter_ highlighted his concerns about Celsius’s rehypothecation. He goes on to say that after seeing the CEO’s reaction to @mikealfred and @coryklippsten, he believes the company is on the edge of collapsing.

@mikealfred, Last night’s Hex’s collapse was likewise explained by an engaged value investor. He stated that the temperature today is Celsius. CEL has dropped almost 25% to 50 cents in the previous 24 hours. $8 was the all-time high. Insolvency is becoming more and more of a concern.

He recommends that users withdraw all of their Bitcoins as quickly as feasible. Don’t wait till withdrawals are closed.

“Your Celsius account is not a bank account”:

In its terms of service, Celsius states, “Your Celsius account is not a bank account, deposit account, savings account, checking account, or any other sort of asset account, and should not be represented as a banking product or service.”

“Terms like ‘account,’ ‘account balance,’ ‘withdraw,’ and similar language used in conjunction with the earn service and the borrow service do not imply or establish, and shall not be construed to suggest, any sort of custody relationship,” Celsius adds.

Clients who want to withdraw cryptocurrency from Celsius’s lending programme must first transfer it to a Celsius custody wallet, which can take up to three days. They can then send it to a different cryptocurrency address.

Celsians Network has yet to release net transfers data for the weeks ending May 19 and May 26. Celsius’s self-reported assets have dropped by more than half since late last year. On May 17, the corporation reported $11.8 billion in assets, down from $24.1 billion on December 24, 2021.

After ongoing discussions with watchdogs, the business decided to discontinue the Earn product in terms of unaccredited investors from the United States in April. Celsius’s core operation, however, has remained lending, with BTC mining serving as merely an alternative among investment plans and a means of securing a substitute revenue source. It’s worth noting that Celsius’s mining business isn’t the only crypto project on the verge of coming public amid the current market turmoil.

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Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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