U.K.-based Nexo offers to buy some of Celsius’s assets
Crypto lending platform Celsius Networks LLC sent shockwaves through an already rattled digital asset market to start the week, with news that it was pausing all withdrawals, swaps and transfers between accounts, “due to extreme market conditions.”
“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the New Jersey-based company said in a statement on Sunday.
Some blamed a sharp slump in bitcoin BTCUSD, -5.86%, which tumbled from around $28,000 on Friday — also hit by worse-than-expected U.S. inflation data — on fallout from Celsius’s troubles. Other cryptocurrencies were also suffering hefty losses on Monday.
Celsius is one of the largest crypto lending companies in the world, at one point claiming more than $20 billion in assets. On Monday, U.K.-headquartered Nexo, an online platform for cryptocurrency loans, announced an letter of intent to buy “remaining qualifying assets” of Celsius.
“Nexo, its partners, and affiliates could readily acquire from Celsius part or all qualifying, outstanding collateralized loan receivables secured by their corresponding pledged cryptocurrency collateral, subject to Nexo’s risk management and collateral requirements,” the company said in a letter addressed to Celsius.
The company said it has been watching latest developments around Celsius and “is mindful of the detrimental repercussions for retail investors and the blockchain community at large.” Nexo said it was in a “solid liquidity and equity posion to help migate the consequences of Celsius’ distressed state.”
Celsius has its share of issues, running afoul of regulators, with some users recently blaming Celsius for steep financial losses by encouraging them to hold its CEL digital tokens as collateral for loans — CEL was down 47% on Monday and has lost more than 74% of its value over the past month, and 97% over the past year, according to CoinGecko data.
The wider cryptocurrency space has been slammed this year, with the total crypto market down more than 40% over the past two months. Bitcoin is now hovering at a level not seen since late 2020 and has lost 48% of its value year to date; it’s off more than 60% since its all-time high-water mark last November.
“We understand that this news is difficult,” Celsius said Sunday. “We are working with a singular focus: to protect and preserve assets to meet our obligations to customers.”
Celsius said its operations were continuing, but that there was “a lot of work ahead as we consider various options.” Last year, Canada’s second-biggest pension fund Caisse de dépôt et placement du Québec (CDPQ) led a $400 million equity round of funding for Celsius.