Celsius repays MakerDAO debt in full
Important takeaways
- Celsius has repaid its $ 41.2 million debt to MakerDAO, which enabled it to unlock the 21,962 wBTC it had used as collateral.
- If Celsius sold its wBTC today, it would suffer a $ 1 billion loss on its lending strategy.
- Celsius has had a liquidity crisis since market prices fell and Three Arrows Capital collapsed last month.
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Celsius has paid off its debt to MakerDAO in full, unlocking about $ 456 million worth of wrapped Bitcoin. It suffers from a potential loss of $ 1 billion on the MakerDAO lending strategy.
$ 41 million to Free Up $ 456 million
It seems that Celsius has finally paid down the debt to MakerDAO.
Etherscan data shows that a wallet identified as belonging to the weary crypto loan company fully repaid a $ 41 million debt in DAI today to release the security of $ 21,962 wBTC (worth around $ 456 million at the time of press release). The wallet closed the MakerDAO vault shortly after repaying the debt.
MakerDAO is a DeFi protocol that allows users to embed DAI stablecoin when depositing security. Celsius is a so-called “CeDeFi” platform that acts as an intermediary for customers, and takes advantage of the opportunities found on DeFi protocols such as MakerDAO. Celsius and several other large crypto borrowers have suffered from major liquidity issues in recent weeks after the collapse of Terra, a downturn in the market and the annihilation of the crypto hedge fund Three Arrows Capital.
While the Celsius wallet was no longer at high risk of liquidation when full repayment was made (Bitcoin would have had to reach around $ 2,722 to trigger a liquidation), data from DeFi Explore shows that on May 12, a $ 700 Bitcoin withdrawal could have liquidated the vault. Celsius added wBTC and DAI on several occasions after May 12 to increase the security level and prevent a liquidation.
The total value of the vault over time was 1.8 billion dollars, while the total value obtained was around 757 million dollars. This is because Celsius was forced to continue paying back DAI to avoid a liquidation, and Bitcoin has also fallen in price since it opened its vault. If Celsius sold its wBTC today, it would post a loss of almost $ 1 billion on the MakerDAO lending strategy. Interestingly, Celsius transferred 24,462.6 wBTC to cryptocurrency exchange FTX shortly after it was unlocked.
Celsius controversial put on pause customer withdrawals last month to put themselves “in a better position to meet their withdrawal obligations over time.” It has since employed advisers to help it deal with potential bankruptcy. It’s snowing under investigation by the Securities and Exchange Commission as well as regulators from four different US states.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
