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Celsius acknowledges $1.2B hole in balance sheet

coindesk.com

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Re: Celsius acknowledges $1.2B hole in balance sheet

#61

Post by powerhour »

impulser_ wrote: post #55
sergiotapia wrote: post #14

Earlier quoted context omitted.

Still waiting to see even one single useful use case for cryptocurrency and block-chain storage. It's all a grift to take money away from stupid retail investors trying to get rich quick.

There are features of cryptocurrencies that would actually be useful in today's financial services. The main one would be near instant settlement. If I make a transaction on Bitcoin, that transaction is completely settled and verified and approved over a hundred thousands times within an hour. All parties can trust that the transaction happened and everyone has their money. That's not possible in today's financial sy…

This sounds good until someone makes a mistake and your money is irreversibly gone forever.

Re: Celsius acknowledges $1.2B hole in balance sheet

#62

Post by ayngg »

kareemsabri wrote: post #37
strangescript wrote: post #19

Earlier quoted context omitted.

They weren't really scamming, but got scammed along with several other companies that were trying to be legit. They made large loans to three arrows capital because on the surface it seemed like a legit serious business hedge fund, but it turned out it making tons of high risk bets in the crypto scene that fell apart when the market crashed.

In what way did it seem like a "legit serious business hedge fund"? I'm unclear how Celsius got scammed making loans to a hedge fund that is on record as investing exclusively in crypto since 2018 [1] - did the hedge fund lie about their positions? 1. https://www.smh.com.au/business/markets/school-friends-start...

Celsius got huge deposits based on unsustainable yield guarantees (17% I think), they took that crypto and used it as collateral on defi protocols, then took the loans they got and gave it to funds like 3ac, who made money on leveraged carry trades that eventually worked up to Luna which was offering an absurd 20% apy through anchor which was completely unsustainable but basically kept afloat by Luna itself dumping money into it.

Everyone could see they were running out of money which would eventually cause them to blow up, which caused people to eventually jump ship, which caused Luna to implode because it was fundamentally flawed but people were either too greedy or didn't do their due diligence to avoid it, which caused all of their assets to vaporize as they tried to defend their stablecoin peg. With 3ac insolvent, nobody that lent to them could get their capital back, which meant they could no longer repay their defi loans which caused them to be liquidated as prices dropped and they couldn't post additional collateral. With their funds locked or liquidated, they had nothing to return to depositors who wanted their stuff back.

To be charitable you could say they weren't outright scamming people, but anyone with a nose should have smelled the enormous stench of death coming from the entire thing.

Re: Celsius acknowledges $1.2B hole in balance sheet

#63

Post by adrr »

strangescript wrote: post #19
adam_arthur wrote: post #3

Scam, after scam, after scam, after scam...

They weren't really scamming, but got scammed along with several other companies that were trying to be legit. They made large loans to three arrows capital because on the surface it seemed like a legit serious business hedge fund, but it turned out it making tons of high risk bets in the crypto scene that fell apart when the market crashed.

Was three arrows a scam or just acting like a hedgefund? It’s well known hedgefunds can go bust like LTCM. Especially if you’re doing arbitrage and your thesis is two disparate assets are price linked.

Re: Celsius acknowledges $1.2B hole in balance sheet

#64

Post by modeless »

adrr wrote: post #46
Barrera wrote: post #41

And yet the site apparently continues to accept deposits: https://celsius.network Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused." These guys are going to prison.

People were still buying hertz stock even though they were going through bankruptcy. They even tried to do secondary offering. Retail investors don’t operate with enough information to make financially sound decisions.

That's the worst possible example since the retail investors were proven right about Hertz...

Re: Celsius acknowledges $1.2B hole in balance sheet

#65

Post by game-of-throws »

sergiotapia wrote: post #14
adam_arthur wrote: post #3

Scam, after scam, after scam, after scam...

Still waiting to see even one single useful use case for cryptocurrency and block-chain storage. It's all a grift to take money away from stupid retail investors trying to get rich quick.

We've had two crypto threads in the past two days. They both had a real world use case in the top comment:

https://news.ycombinator.com/item?id=32080174

https://news.ycombinator.com/item?id=32094142

Or do those not count?

Re: Celsius acknowledges $1.2B hole in balance sheet

#66

Post by civilized »

Barrera wrote: post #41

And yet the site apparently continues to accept deposits: https://celsius.network Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused." These guys are going to prison.

Currently paused due to "extreme market conditions". What conditions exactly? BTC is down from all-time high, but still worth about twice as much as it was only two years ago. Ethereum is worth over 4x as much. Is a two-year average appreciation rate of 40-100% per year so witheringly horrible that the Celsius business model couldn't survive it? Did crypto have to basically 2x every year without fail for Celsius to survive?

Re: Celsius acknowledges $1.2B hole in balance sheet

#67

Post by JumpCrisscross »

adrr wrote: post #63
strangescript wrote: post #19

Earlier quoted context omitted.

They weren't really scamming, but got scammed along with several other companies that were trying to be legit. They made large loans to three arrows capital because on the surface it seemed like a legit serious business hedge fund, but it turned out it making tons of high risk bets in the crypto scene that fell apart when the market crashed.

Was three arrows a scam or just acting like a hedgefund? It’s well known hedgefunds can go bust like LTCM. Especially if you’re doing arbitrage and your thesis is two disparate assets are price linked.

> well known hedgefunds can go bust like LTMS

LTCM’s managers didn’t skip bail and go full fugitive [1].

[1] https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-...

Re: Celsius acknowledges $1.2B hole in balance sheet

#68

Post by JumpCrisscross »

impulser_ wrote: post #55
sergiotapia wrote: post #14

Earlier quoted context omitted.

Still waiting to see even one single useful use case for cryptocurrency and block-chain storage. It's all a grift to take money away from stupid retail investors trying to get rich quick.

There are features of cryptocurrencies that would actually be useful in today's financial services. The main one would be near instant settlement. If I make a transaction on Bitcoin, that transaction is completely settled and verified and approved over a hundred thousands times within an hour. All parties can trust that the transaction happened and everyone has their money. That's not possible in today's financial sy…

> We don't even have T+1 settlement in the US yet

By default, no. If you’re an idiot and put yourself in a place where you need instantaneous settlement, you can get it. Hilariously, their extravagant cost was apparently too low. Post crypto, they index to crypto trading fees. These are at least quadruple their historic spreads. I don’t believe anyone but the crypto bros demand it in real markets.

Re: Celsius acknowledges $1.2B hole in balance sheet

#69

Post by danuker »

Barrera wrote: post #41

And yet the site apparently continues to accept deposits: https://celsius.network Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused." These guys are going to prison.

They assumed collateral would hold 25% of its initial value until the end of the loan.

In the past 12 years, Bitcoin lost 80%+ of its market value. Three times.

It came back before, so they might become solvent again eventually. But this was bad risk management.

Re: Celsius acknowledges $1.2B hole in balance sheet

#70

Post by wmf »

civilized wrote: post #66
Barrera wrote: post #41

And yet the site apparently continues to accept deposits: https://celsius.network Business as usual. Oh yeah, check out our hello bar for that minor detail that withdrawal, swap, and transfers are "currently paused." These guys are going to prison.

Currently paused due to "extreme market conditions". What conditions exactly? BTC is down from all-time high, but still worth about twice as much as it was only two years ago. Ethereum is worth over 4x as much. Is a two-year average appreciation rate of 40-100% per year so witheringly horrible that the Celsius business model couldn't survive it? Did crypto have to basically 2x every year without fail for Celsius to s…

When everybody piles in near the all-time high then wants to cash out at the bottom, the two-year return becomes irrelevant.
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