After Celsius froze all customer accounts, CEO Alex Mashinsky commented on the more than worrying events for the first time. Mashinsky assured that Celsius is doing everything in its power to resolve the difficult situation. Accordingly, his team is working around the clock on a solution.
In doing so, Mashinsky did not address any of the topics discussed in the media, but primarily tried to offer consolation to investors. The feedback on his statement shows that many small investors actually have to worry about amounts that are existential for them.
With Terra collapsing, the entire industry faces yet another crucible. If Celsius fails, it is likely to be etched in the collective memory and stunt future market growth. The fact that Celsius published a blog post last week pledging to be liquid further damaged confidence.
stETH becomes a risk
Staked Ether (stETH) still has a special place in the drama now unfolding. Because Celsius has invested a large sum in the token. With stETH, investors and companies can already participate in Ethereum staking while remaining liquid. Because for every stETH token, investors are entitled to receive ETH as soon as the merge is carried out and Ethereum switches to Proof of Stake.
Until then, stETH will retain roughly the same value as ETH, but unlike a stablecoin, will not be pegged to it. Instead, the price is based on demand and supply as well as the notion that one can exchange stETH for ETH at some point in the future.
The difference to ETH is currently around 6% and the gap is a bit wider than it was a few days ago. The fear is that stETH will collapse and that Celsius will lose a significant part of its own liquidity.
What's next?
A Wall Street Journal report suggests that Celsius is currently looking for investors to help it stay afloat. Restructuring also seems to be an option.
Should the company actually suffer bankruptcy, that would probably be fatal for small investors. They do not enjoy any special protection, but would then have to join a long queue of creditors. It is foreseeable that the process would be lengthy and would also involve some effort. For example, the bankruptcy of the New Zealand stock exchange Cryptopia showed that the settlement of claims not only takes years, but can also be quite complex.
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