Lending platform Celsius has transferred nearly 25,000 Wrapped Bitcoin (wBTC) worth $528.9 million to crypto exchange FTX. The community therefore fears that there could soon be a mass sale.
This transfer was made possible because the lending platform paid off its remaining $41.2 million in debt to Maker. This made the wBTC deposited as collateral available again.
However, the community is unsure what to think of the transfer. Some fear that there could soon be a mass sell-off of this wBTC on the exchange, which in turn would send Bitcoin ( BTC ) prices lower.
Others were more optimistic that this could signal Celsius exchanging its Wrapped Bitcoin for BTC. That, in turn, would bode well for people who have deposits on the exchange and are hoping that Bitcoin withdrawals on Celsius' platform will finally be possible again. Bitcoin is up 8 percent to above $22,100 in the past 24 hours, suggesting that market participants took the news positively.
So far, Celsius and CEO Alex Maschinski have remained silent about any money movement .
Crypto attorney Joni Pirovich, who heads the blockchain and digital assets practice, told Cointelegraph on Thursday that Celsius' loan repayments at Maker would ultimately help customers.
“The Maker protocol relies on over-collateralised loan positions such that DAI’s $41 million loan repayment freed up 21,962 wBTC of capital, which is now available to enable customer withdrawals.”
Pirovich added that even if Celsius eventually files for bankruptcy, repaying the loan and taking back the collateral could improve the situation for customers.
"The question is what Celsius will do with the withdrawn collateral. Are you holding it back for customers or are you risking the capital on trading and on-lending?"
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