Celsius Network News: $172M Collateral Is Reclaimed By Celsius From Aave and Compound

As of Friday, the crypto lender had paid off $95 million in debt from the two DeFi platforms that it had borrowed from.

Customers’ withdrawals have been blocked because of liquidity issues at Celsius Network, which paid out $95 million in debt to Aave and Compound, two decentralized finance platforms.

As collateral, the platforms had been holding $172 million. This maneuver liberated up $172 million. On the Maker platform, Celsius utilized a similar treasury-management approach to free up $480 million in collateral last week.

One Celsius wallet linked to the Nansen Portfolio tracker showed that it transferred $35 million in DAI, MakerDAO’s dollar-pegged stablecoin, and $40 million in Circle’s USDC. According to the blockchain transaction tracker Etherscan, the wallet also sent another $20 million in USDC to the Aave protocol late Sunday.

Celcius also bought 1,647 WBTC ($33.4 million) worth of interest-bearing token derivatives on Aave, as well as around $1.6 million worth of BAT and xSUSHI, a derivative of decentralized exchange SushiSwap’s native token that pays interest on the exchange’s staking platform.

Celsius was able to recoup some of the debt’s collateral thanks to the down payments. An estimated $172 million worth of wrapped bitcoin (WBTC) has been reclaimed by the firm since Friday. The Compound protocol’s native token, COMP, was also redeemed for around $700,000 in cash.

The Recent Credit Crisis

Voyager Digital and BlockFi, two of the largest centralized crypto lenders, were both forced to seek bankruptcy protection and a rescue from the crypto exchange FTX during the recent credit crisis in the crypto markets. In order to prevent a run on its deposits, Celsius halted all customer withdrawals beginning June 12 and eliminated jobs and brought in restructuring experts.

To regain the digital assets offered as collateral, Celsius appears to be making progress on paying off its remaining debts to DeFi protocols.

Aave and Compound owed the firm $140 million, down from $235 million on Friday, according to data platform Zapper’s dashboard, following the company’s recent measures.

If Celsius can pay off the remaining debt, it will release $680 million in collateral that it had pledged as security for those loans.