1 year ago
84 The offer to buy “any remaining qualifying assets” came after Celsius has paused all withdrawals, swap and transfers between accounts. The crypto lender said it was taking this action to put the firm in a better position to honour, over time, its clients’ withdrawal. Celsius also claims that it has valuable assets and is working to meet its obligations.
“Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our terms of use that will allow for this process to take place,” the troubled lender wrote on its website.
In a series of tweets, Nexo said that Celsius’s apparent insolvency has prompted it to offer to acquire its assets in order to supply immediate liquidity to affected clients. It added that before that and, as a sign of goodwill, they reached out yesterday to the Celsius team to provide support and assistance, but their help was denied.
“As the leading global provider of crypto-backed credit lines and a digital assets institution whose business now spans an exchange offering and institutional-focused capabilities, among others, we’re uniquely positioned to offer a strong buffer,” it added.
As per Nexo’s tweet thread, the offer is subject to its stringent risk management and collateral requirements and is aimed at providing immediate liquidity/ protection to Celsius’ clients.
However, Nexo warned that its offer will expire by June 20, unless otherwise rejected by Celsius or withdrawn, it added in a letter of intent.
Some blamed a sharp slump in bitcoin prices for recent troubles. Celsius, which at one point claimed more than $20 billion in assets, has apparently suffered an old-fashioned bank run which occurs when many clients withdraw their money because they believe their custodian may cease to function in the near future.
As per recent reports, the bear market has caused some damage to several players across the cryptocurrency world. Binance, the world’s largest cryptocurrency exchange, froze withdrawals for over three hours just as the price of bitcoin and other cryptocurrencies plunged.
Crypto lenders face increasing pressure as US regulators want to better police their products, which pay customers rates higher than most banks’ saving accounts. The SEC is reportedly investigating Celsius Network as a part of a broader scrutiny against cryptocurrency lending platforms.
Another crypto lender, BlockFi, was ordered to pay roughly $100 million to settle charges of offering unlicensed interest-bearing accounts for retail investors.
In comparison, Nexo acquired a stake in SEC-regulated Texture Capital in a move that clears the path for it to offer new services through a registered broker-dealer arm. The acquisition puts Nexo on a firmer regulatory footing with the Securities and Exchange Commission and positions it to offer a broader range of products, including blockchain-based securities. It also allows the platform to perform all operations in a regulatory compliant manner.
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