Celsius Network’s CEL price doubles after paying back $10 million to Compound Finance

Celsius made a $10 million repayment to Compound Finance in DAI stablecoin, in an effort to shore up the network’s liquidity. Celsius has made several other repayments over the past week, closing positions with lenders, according to data from Etherscan. 

Celsius network paid $10 million worth of DAI to Compound Finance

Celsius Network, one of the largest crypto lenders, made a significant payment to Compound, transferring $10 million in stablecoin DAI on June 21. The payment was made to the interest-yielding service Compound in an attempt to regain liquidity. 

On May 6, the Celsius Network witnessed $397 million in inflows and $1 billion in outflows, and the firm remained unable to afford withdrawals. All withdrawals, transfers and swaps were then paused, on June 13, 2022, to enable the network to work on rebuilding its finances and tackle the crisis at hand. 

Based on data from the Etherscan block explorer, the Celsius network has made a number of other repayments over the past week. In a series of transactions, Celsius paid $53.6 million DAI to Oasis Protocol; a privacy-enabled blockchain platform. 

Transfer of $10 million in DAI from Celsius Network to DAI

Experts consider these moves Celsius Network’s efforts to regain liquidity and head toward solvency. 

Withdrawals, swaps and transfers remain disabled on Celsius

Despite Celsius Network’s efforts, however, the lender has still paused all withdrawals, swaps and transfers. In a recent blog post, the network informed the community that the project’s objective is to stabilize liquidity and operations, and this process could take time. 

Celsius Network’s priority is to maintain an open dialogue with regulators and officials and find a resolution for the liquidity crisis. The plan of action is to pause Twitter Spaces and AMAs to focus on navigating the challenges facing the Celsius Network. 

The blog reads:

We are pausing our Twitter Spaces and AMAs to focus on navigating these unprecedented challenges and seeking to fulfill our responsibilities to our community. Acting in the interest of our community remains our priority and we will continue to work around the clock.

Celsius’ CEL token price doubled; experts suspect short squeeze

The CEL price is up 105% in the last 24 hours; however, despite the rally, the Celsius token is still 84% away from its all-time high of $8.02. Plan C, a leading analyst, announced that a crypto group had put forward a verified reward of $20 million for anyone with information on a concerted attack it was speculated Celsius Network has suffered. 

Several experts in the crypto ecosystem speculate that Celsius Network was the target of an attack by a third party. A cryptocurrency group is now looking for information proving that the project was hit by a coordinated attack from prominent institutional players. 

Plan C told CryptoSlate that,

I know the money is real because I know the group. I talked directly to them, and they have a good reputation in crypto.

The analyst suspects a GameStop-like short squeeze in the CEL token. CEL price has nearly doubled in the past 24 hours, and Plan C believes the orchestrated attack is the cause of the project’s liquidity issues. 

Plan C suspected the short squeeze on June 14 when CEL token price climbed from the local low to the top of the week, a 2722% rally. The analyst argues that the spike could have resulted from a short squeeze on those shorting CEL while the network’s solvency remains uncertain. 

CEL short squeeze according to Plan C

Simon Dixon, a Celius investor, was quoted as saying, 

I smell a rat in the leverage boom & deleverage crash. It ends with banks buying up crypto companies & stripping them of their assets before the CBDC rollout. Don’t get me wrong, the crypto sector fucked up doing all the things I teach investors to avoid, but I’m following the money.

Celsius acted like a bank, treated deposits like loans?

A video released by YouTuber and investigator Coffeezilla titled “Why Celsius Fell Apart” was released on June 19, 2022. In the video, there is alleged commentary from a former Celsius Network employee who claims the firm acted as a bank and used the crypto sent by its customers as loans instead of actual deposits. 

The insider was quoted as saying, 

[Celsius Network was]...engaging in some fairly risky practices, essentially taking borrowed assets and lending on them multiple times in order to maximize their yield.

The former employee revealed Celsius Network had invested in Ethereum with Stakehound. The firm faced an incident where the custodian of its private keys, Fireblocks, lost access to it and did not back up appropriately. A lawsuit was filed against the custodian, and nearly $75 million in Ethereum was lost. 

Celsius lost 38,178 ETH, and the staked ETH is trapped without recourse. The employee confirmed that part of these funds were client deposits. 

The YouTuber argued that Celsius recklessly invested client funds and suffered a liquidity crisis due to a downturn in crypto. 

Unbalanced transactions between CEL and FTX

The narrative of a #CelShortSqueeze has gained wide traction on crypto Twitter and allegations have been made against Sam Bankman-Fried, co-founder and CEO of crypto-exchange FTX. Several crypto proponents suspect SBF is behind the downfall of Celsius, but he has stringently denied the allegations. 

SBF said in a tweet, “this is definitely false; we want to help those we can in the ecosystem and have no interest in hurting them — that just hurts us and the whole ecosystem.” 

The unbalanced transactions related to CEL and FTX have created mistrust and suspicion in the community. Several small inflows and large outflows of CEL from MEXC, 1INCH, OKX, Gate.io and Huobi; these are directed to the FTX exchange. Find the details of CEL transfers to FTX based on Etherscan data here:

Transactions of CEL to FTX exchange

Since large wallets are depositing CEL to FTX instead of elsewhere, it has increased suspicion of a link between the two firms. Most wallets depositing CEL are still active, despite withdrawals being suspended.