CeFi Bank Scrambling to Reduce Exposure After Suspending Withdrawals
Celsius, the embattled CeFi lending platform, is aggressively paying down its debt and freeing up assets previously locked in MakerDAO, a collateralized debt protocol.
This month Celsius paid down 183M DAI owed to MakerDAO and withdrew 2,000 Wrapped Bitcoin, worth nearly $21M, according to DeFi Explore, an analytics platform. Celsius still owes about 41.2M DAI to the permissionless MakerDAO protocol.
By making the repayment, Celsius reduced the position’s liquidation price to $2,722.27 from around $13K. That means the WBTC deposited as collateral will be liquidated to repay the debt only if BTC drops below $2,722. BTC was at $20,489 in early morning trading New York time.
The news comes roughly four weeks after Celsius appeared to be at significant risk of liquidation.
On June 13, Celsius suddenly suspended customer withdrawals citing extreme market conditions. That same day, crypto reporter Wu Blockchain tweeted that Celsius’ address represented the largest personal position on MakerDAO, with 278M DAI borrowed against 17,919.37 WBTC for a liquidation price of $22,584.
‘All That Candy’
Despite paying down the debt, Celsius has not indicated that customer withdrawals will be re-enabled anytime soon. Twitter user BClarkieeeeee expressed frustration that Celsius depositors are still unable to access their funds, tweeting “All that candy floating around and we ain’t getting s**t yet. Damn.”
The company began adding collateral and reducing its debt over the following days and weeks, with Celsius increasing its collateral to 23,962.6 WBTC and reducing its liquidation price to $16,582.48 on June 14. Bitcoin tagged a local low of $17,600 on June 18.
Celsius’ MakerDAO position is now backed by 21,962 WBTC (worth roughly $450M). Celsius has so far realized a loss of $688.2M on its position, having deposited $1.8B worth of WBTC and withdrawn $757.6M.
The latest repayments have received mixed reactions on social media.
Twitter user ShayneOnChayne suggested the move is likely part of preparations for bankruptcy proceedings. But CEL_100 is skeptical of the theory, commenting “if you declare bankruptcy, you don’t pay down debt. You walk away.”
AAllen11 warned that the freshly freed up collateral could soon be dumped on the markets. Davide Melonei questioned the source of Celsius’ new-found DAI.
The repayment has done little for Celsius’ native CEL token, which is trading for $0.85 after dropping about 5% in 24 hours, according to CoinGecko.