Cash-strapped cryptocurrency lender Celsius, this week paid off $223 million in debt to issue $450 million in collateral on Maker blockchain technology. In a new development, it may attempt a similar strategy with two other important decentralized finance (DeFi) platforms: Ave and Compound.
A crypto wallet linked to Celsius by blockchain intelligence company Nansen on Friday reduced its outstanding debt to Ave and Compound from $258 million to $235 million, according to data from DeFi data dashboard Zapper.
Will Celsius pay off its debt in full?
If Celsius repays the loan in full, the cryptocurrency lender will be able to seize $950 million in assets that are currently locked on the DeFi protocol and promised as security for the loan. These actions appear to be a part of the company’s plan to restructure its debt in accordance with DeFi rules and recover invaluable collateral that has been temporarily closed to fill an alleged hole on the balance sheet. has gone.
The broader picture is that in the age of decentralized finance, shrewd watchers with access to blockchain-data explorers are gaining a front-row seat to watch a struggling cryptocurrency company as it struggles to find a liquidity solution.
According to reports, Celsius, led by CEO Alex Mashinsky, has hired banking giant Citigroup (C) to advise on funding possibilities and is collaborating with restructuring experts from advisory firm Alvarez & Marshall. In a statement on June 30, the firm said it was exploring ways to “preserve and protect the asset”. These measures may include strategic mergers and restructuring of liabilities.
Blockchain data shows that Celsius began repaying its debt to the DeFi protocol a day after the announcement. The cryptocurrency lender paid its loan in full in less than a week and received $450 million worth of wrapped bitcoin (WBTC) as collateral. After some time passed, the company sent $500 million worth of WBTC to cryptocurrency market FTX, probably for the purpose of selling.