Hello, SPIer's, today im just dropping a small update about some of our holding we have on Celsius. If you have not heard, they have suspended all transfers and withdrawals. They said they have done this due to extreme market conditions and freezing transfers and withdrawals had to be done to help stabilise liquidity and operations. I dont have much hope for this and from this coming week, I will be writing this down to a loss in our weekly report.
The problem with Celsius
From my POV, they have lent out too much money in loans and now they dont have any money to provide liquidity in a nutshell.
Celsius makes money from loaning crypto out. They get that crypto they loan out from investors that they promise to pay interest. They charge 12% for a loan and pay 5% to the investor and net 7% as an example. The more crypto they can loan out, the more money they can make. Between March and May of this year, investors pulled out more than $1 billion of crypto from Celsius. The problem is they also need to keep some crypto liquid for investors to withdraw and if they loan out too much crypto and dont have enough to provide liquidity are a bunch of whales pull put, we get what is happening today. They took a $50 million loan from FTX. From Bitfinex they took a loan of 39k ETH as their ETH is locked in ETH 2.0 and 170 million Tethers to pay down other debt. We'll wait and see.
I was watching a video from coffeezilla and I took this snap from it. It basically highlights in the terms and conditions that I signed away our crypto and any legal right to it. Sorry dudes, my bad I never read the 20 million word terms. I'll spank myself...HARD. I also saw that NEXO has put an offer on the table to buy Celsius and its customer base but not looking like they are that interested in being bought out.
So, what's SPI got on there?
About $2040 which is a decent chunk but not the end of the world. We are likely to have not lost more as we were holding 1 BTC on there for a very long time. I have been using 1 BTC for defi but as the yield is under 10%, I was planning to move it back to Celsius to compound BTC passively. JK6276 DM'ed me a few weeks back, maybe 3 and dropped me a link to a news article about what was happening. After looking into more, I saw that people were tracking everything, all the transactions and loans and reporting it on crypto Twitter. That's the beauty of the blockchain baby, it's all out there for the world to see if they look. So, in short, JK probally saved us whatever the price of 1 BTC is today, you can check yourself, I am scared to load up coingecko and look. Without his DM, I would have shipped 1 BTC into it, no doubt. Feeling blessed.
So here is the stuff we hold on Celsius
Some BTC, ETH and Tether. Not really related but I notice the rewards go up and down with the markets. When BTC was over $60k, rewards were over $5k. I guess 80% of the time these funds are gone based on what im reading and seeing on the internet (Reddit and youtube). Something more related is im looking at SPI's $ value and this is 1.6% of our holdings. That's insane and to think only a few months ago, we were on the verge of cracking $500k. I guess I still have that mindset a little and think in the back of my head, that SPIs holding are worth $200-300k when in reality, we've dipped to under $150k with everything dropping 30% this week.
To wrap up, im writing this down as a loss from the next report going forward. If we get access again and can withdraw, we can think of ourselves lucky. It's $2k, not nice but not the end of the world either. This will be the first time something like this has happened to SPI and we can think of it as part of the game and something that's always on a timer to happen again as we dip in and out of different platforms and defi projects. People put their saving's into Celsius, there are subreddits full of people that talked about doing this and taking equity out on their homes, going all-in on stables to earn 10% and all aiming to live off the passive income. Im still surprised Celsius as one of the biggest crypto lending platforms is the one to go down.
That's the update and pretty much as I know. You might think they could come back but they cant really because as soon as they unfreeze transfers and withdraws, there will be a huge run of investors (like us) pulling funds out and then they run out of liquidity again and have to freeze withdrawals again and the cycle repeats. Like I said, in my mind, it's gone and if we can get it at some point, that would be cool.
That's all folks, have a great day and peace out!