Controversial crypto lender Celsius allocates $25 million for withdrawals, burns $500 million in WBTC
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Cryptolender Celsius Network, currently operating under bankruptcy protection, has established a crypto wallet with $25 million in digital assets for Celsius’ escrow account holders to withdraw, blockchain intelligence firm Arkham Intelligence said in a report.
The transferred assets were $10.39 million USDC stablecoin, $8.8 million ether (ETH), $4.31 million altcoins and $1.57 million other stablecoins, including Binance USD, DAI, Paxos dollar and Gemini USD.
On Wednesday, Celsius interim CEO Chris Ferraro said in a Wednesday morning court hearing that custodians had withdrawn $17.7 million of those cryptocurrencies, with another $3.5 million withdrawn in the process. That represents 60% of qualified custody users and 80% of crypto value, he said.
Celsius was among several of the high-profile crypto firms that collapsed last year amid the crypto market turmoil. The lender stopped user withdrawals in June and filed for Chapter 11 bankruptcy protection in July. A subsequent legal process involved heated debate over the ownership of the assets customers deposited with the platform.
The lender said on March 2 that it opened withdrawals to select escrow account holders with certain restrictions after securing approval from the US Bankruptcy Court. Celsius was authorized to distribute 94% of each eligible user’s custody holdings, according to a court filing.
However, Arkham reported $13.62 million of withdrawals from $25 million of funds based on blockchain transaction data. The other $4 million in withdrawals were likely in bitcoin (BTC), an Arkham analyst told CoinDesk in a Telegram message. Arkham does not track transaction data on the Bitcoin blockchain.
Read more: Crypto Lender Celsius Should Continue Its Exclusive Right To Pursue Novawulf Deal, Judge Says
Celsius’ $500M wBTC maneuver
Celsius also burned about $500 million worth of wrapped bitcoin (wBTC) in late February, according to the Arkham report. A wBTC token represents one BTC on the Ethereum blockchain.
The lender sent over 20,000 wBTC in two batches to a separate address, which then forwarded the tokens to crypto trading firm FalconX.
FalconX sent the tokens to another account, presumably owned by the Celsius liquidator or a partner. The entity then burned, in other words redeemed, tokens for native BTC.
The maneuver may be part of Celsius’ plan to consolidate its crypto holdings and satisfy customer withdrawals in BTC. In August, CoinDesk reported that the crypto lender was massively short of BTC inventory, owing around 105,000 BTC to customers while only having 14,578 BTC and 23,348 wBTC on its balance sheet.
Celsius’ crypto wallets on the Ethereum blockchain hold more than $1 billion in crypto assets, according to Arkham data. This does not include holdings on other blockchains, including the newly redeemed BTC on the Bitcoin blockchain.
The lender’s largest holdings are $638 million of Lido’s staked ether derivative (stETH) and $251 million of the lender’s own CEL tokens.
Read more: Celsius is seeking to recover millions from Mashinsky, other former executives
Jack Schickler contributed reporting.
