Celsius Network
| Celsius Network | |
| |
| Founded | 2017 |
|---|---|
| Headquarters | London |
| Key People | Alex Mashinsky, Chief Executive Officer |
| Website | https://celsius.network/ |
Celsius Network LLC is a bankrupt cryptocurrency loan company, a Blockchain-based marketplace platform where membership provided access to curated financial services unavailable through traditional financial institutions. Celsius specialized in the fields of consumer lending, fintech, and financial services.[1]
Before the company filed for bankruptcy in July 2022, users were able to deposit a range of cryptocurrency digital assets, including BTC and ETH, into a Celsius wallet to earn a percentage yield or take out loans by placing their cryptocurrencies as security.
History[edit]
Celsius Network was founded in 2017 by Alex Mashinsky, Daniel Leon, and Nuke Goldstein. It raised $50 million in an initial coin offering (ICO) in 2018. It raised $750 million in 2021 at a $3.25 billion valuation.[2]
Celsius, which let users lend out their coins for up to more than 18% annualized rate, grew to more than 1.7 million users and at one point had more than $20 billion in assets.[3]
The CEL token, whose value was 42 cents in August 2020, finished that year at more than $5.50. It went up a further $2 by May 2021. The company hired hundreds of people and moved its headquarters to Hoboken, N.J., in addition to offices in Britain, Serbia and Israel.
The company built itself into one of the biggest cryptocurrency lenders by pitching itself as less risky than a bank with better returns for its customers. But it overextended itself offering big yields to crypto depositors and making large loans backed by little collateral, leaving itself little cushion in the event of a market downturn.
In June 2022, the company suffered a number of severe losses, including over 38,000 ETH, in an error related to Stakehound, followed by a $22 million loss in connection with the Badger DAO hack.[4]
On June 12, 2022, Celsius stopped all of its estimated 500,000 users from withdrawing their money because of “extreme market conditions,” with no word on when it would be available again. As much as $8 billion in deposits was frozen. Securities officials from five states began working with Celsius's lawyers to investigate the company and find out where the money might be.[5]
Later in June, Celsius said it was exploring options such as “strategic transactions as well as a restructuring of our liabilities.”
Celsius Network laid off 150 workers in its bid to stay operational. According to the business information research platform Owler, the layoffs represented an 18% cull in staff numbers. Celsius is also reported to have paid back Aave $50 million on July 3, improving its loan health ratio and freeing up a significant chunk of customers’ funds.[6]
Celsius filed for chapter 11 bankruptcy protection on July 13, 2022, a month after halting withdrawals.[7] It had a $1.2 billion hole in its balance sheet after a collapse in cryptocurrency prices, which made its business model unsustainable.
Alex Mashinsky resigned as CEO in September 2022. At the time, he said he was committed to helping return deposits to investors.[8]
In January 2023, a bankruptcy judge ruled that $4.2 billion in cryptocurrency deposited in Celsius Network’s interest-bearing accounts were the property of the firm, dealing a blow to thousands of customers who had attempted to get the digital coins returned to them.[9] Also in January 2023, New York's attorney general sued Mashinsky, claiming he defrauded investors out of billions in digital currency by not revealing the company's precarious health.[10]
In 2024, former Celsius customers began to receive part of the funds they had lost through a court-approved bankruptcy reorganization plan.
Products and Services[edit]
Celsius Network was an interest income and lending platform accessible via a mobile app. Crypto holders could earn interest by transferring their coins to their Celsius Wallet and borrowing USD against their crypto collateral at interest rates as low as 4.95% APR.[11]
Key People[edit]
- Alex Mashinsky, Chief Executive Officer
- Nuke Goldstein, Chief Technology Officer
References[edit]
- ↑ Celsius. Crunchbase.
- ↑ Crypto lending startup Celsius ends new transfers for non-accredited investors in U.S.. Axios.
- ↑ Celsius Says Its Exploring Strategic Transactions, Restructuring. Bloomberg.
- ↑ How Crypto Lender Celsius Overheated. Coindesk.
- ↑ Crypto’s frozen mystery: The fate of billions in Celsius deposits. The Washington Post.
- ↑ Celsius takes affirmative action to stave off bankruptcy. cryptoslate.com.
- ↑ Crypto Crash Drags Lender Celsius Network Into Bankruptcy. The Wall Street Journal.
- ↑ New York sues Celsius Network founder Mashinsky for defrauding crypto investors. Reuters.
- ↑ Celsius Network Wins Ownership Rights to Customer Crypto Deposits. The Wall Street Journal.
- ↑ New York sues Celsius Network founder Mashinsky for defrauding crypto investors. Reuters.
- ↑ Celsius. Celsius Network.