To recap, Celsius was founded in 2017 by CEO Alex Mashinsky and quickly gained a lot of popularity by promising customers attractive interest rates. The company eventually attracted major investors, including the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and investment firm WestCap, among others. Last year alone, Celsius raised $750 million in investment at a valuation of $3.5 billion.

However, the platform ran into major problems in mid-June 2022. In a nutshell, unbundling the stETH synthetic asset rate from the original ether made it unprofitable for users to withdraw coins from the platform. That is, the company essentially had to deposit its own money for various transactions, while customers’ ethers remain locked up in the Etherium 2.0 network, because it is not yet possible to withdraw them from there.

Celsius platform home page

It all ended up blocking users’ cryptocurrency withdrawals and their funds. Read more about the story and the reasons behind it in a separate article.

What’s going on with cryptocurrency companies?

FTX has begun talks with Celsius management about providing financial support or an acquisition. However, according to insiders, the platform’s management has decided to drop the idea after examining Celsius’ financial situation. Specifically, a $2 billion hole was found in Celsius’ balance sheet, so FTX felt it would be difficult to do business with the company. Celsius representatives have not yet commented on the situation in response to a request from The Block’s journalists.

As we have already noted, Celsius has suspended withdrawals from its platform since June 12 due to “extreme market conditions”. For several weeks now, the company’s client funds have essentially remained frozen. This is a serious problem that threatens to cause a major scandal – as of May, Celsius was claiming 1.7 million active clients and $12 billion in funds under management. It’s likely that users can’t get to most of that amount now.

FTX head Sam Bankman-Fried

What’s most interesting is that all this time the company has made virtually no announcements. The last message from it on social media was posted back on 19 June – at which time Celsius promised to “continue to stabilise liquidity and operations”.

On topic: The Celsius Network platform is preparing for bankruptcy proceedings. What does it mean?

Celsius’ problems can only get worse given the unfavourable situation in the crypto market. Yesterday, Bitcoin once again dipped below the $20,000 line without significant support from buyers. Today, it will continue to be in this price range.

Bitcoin exchange rate

That said, June 2022 was the worst month in Bitcoin’s history in terms of returns. Its price has fallen by more than 40 percent in that time frame.

Bitcoin yields by month

The collapse coincided with negative dynamics in the US stock market, with which the crypto is highly correlated, that is, linked. As analysts point out, the S&P 500 index is down 1.8 per cent for the day, which is historically quite a big jump.

S&P 500 chart

On the same day, the Nasdaq Composite fell 2.6 percent.

The Nasdaq Composite chart

Meanwhile, the dollar index, which shows the strength of the currency against a basket of the most popular foreign currencies, is approaching new records. At the time of writing, it is just 0.2 points off its high since 2002. Consequently, other assets in the dollar are quite predictably getting cheaper.

DXY Index

Also worth noting is the rise in the US PCE index, i.e. the implicit consumer price deflator. It indicates a significant increase in inflation in the country.

PCE Index

The bottom line news here is disappointing – the macroeconomic situation is unlikely to “allow” the formation of a new bull run in the cryptocurrency market for now. That said, it is gradually moving into an accumulation phase, which investors have traditionally taken advantage of.


We believe that such a leak is likely to put an end to this platform. If one of the market leaders represented by FTX refused to save Celsius despite the abundance of available funds, it means that doing such a thing is really dangerous. That being said, it is hard to imagine a smaller company being willing to rescue such an organisation: it would still have to take responsibility and accept the risks of loss. And that, in the current climate, is extremely dangerous to do.


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