Celsius Network’s collapse into bankruptcy

Yanda
4 min readNov 24, 2022

In this article, we will analyze what happened to one of the most important platforms of CeFi and fintech as well as the most famous loan company in the crypto industry, which has caused, in recent months, a lot of scandals that have led to inspections by the U.S Department of the Treasury.

What is Celsius Network?

Celsius Network is a CeFi platform that acts as an intermediary, allowing its users to deposit liquidity by becoming creditors, receiving annual interest as a reward, and applying for a cryptocurrency loan.

The application can be accessed from both smartphones and computers. Unlike its competitors, it has many currencies on which to receive interest and compensation in the native CEL token.

Another interesting feature is Celpay, the cryptocurrency transfer service. Thanks to this function, you can transfer coins to anyone you want by simply sending them a link.

All other competitors identify the transfer of coins to different addresses as a withdrawal of their currencies and only later as a transfer to another address. Celsius, on the other hand, saves its users unnecessary commissions for transfers within its servers.

A crucial role is played by its token, CEL; its holders have a lot of benefits such as

  • Decrease in the required rate of interest to obtain a loan
  • Higher interest above crypto, and stablecoins’ deposit
  • Interest of 4.86% on CEL token.

In a few words: “More Cel, more rewards. It’s not rocket science”

Take a loan in a CeFi platform

First of all, to take a loan in a CeFi platform like Celsius, it’s essential to provide collateral, a determined quantity of tokens that has an equivalent value, in this case, our coins itself, above which we obtain an interest. When we take out a loan, our coins do not generate interest but are used as collateral.

The platform will charge us interest for this loan, paid monthly or annually, and will not allow us to unlock the collateral-bound coins until we have settled the debt.

Why did Celsius Network crash?

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Yanda

Hybrid Finance protocol linking CeFi and DeFi