Celsius recovery plan proposed amid community-led short-squeeze attempt

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Celsius recovery plan proposed amid community-led short-squeeze attempt
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Celsius’ lead investor BnkToTheFuture and its co-founder Simon Dixon have offered to help the network by deploying a similar “financial innovation” used in 2016 to prevent the liquidation of cryptocurrency exchange Bitfinex.

Although Dixon’s statement on Saturday, June 18 did not include specific details of the recovery plan provided to Celsius’ board of directors and CEO Alex Mashinsky, Dixon noted that it was similar to the plan provided to Bitfinex after the August 2016 hack , which he claimed was resolved within nine months.

“I believe traditional finance will not provide a timely solution for Celsius like we used to see at Mt. Gox, which is still unresolved 10 years later. I believe this can only be solved by using innovative solutions in finance, As we did with Bitfinex, the solution was resolved within 9 months and worked well for depositors.”

Dixon noted that as a Celsius shareholder and lender, he is “enthusiastic to support Celsius through a recovery plan” due to the “short-term systemic impact on those who own Bitcoin,”

“My role is to provide solutions because we have the experience, license and technology to do so,” he said.

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BnkToTheFuture is a global online investment platform that allows investors to invest in fintech companies, funds and other new alternative financial products. The platform has a network of over 85,000 accredited investors. In June 2020, Celsius launched a stock offering with the investment platform, raising $20.46 million through 1,039 investors.

Bitfinex Solutions

In August 2016, Dixon’s Celsius program took inspiration from his company’s solution after Bitfinex announced it had lost around 120,000 bitcoins (BTC) in a cybersecurity breach that at the time resulted in the loss of around $72 million in client funds.

Instead of going through a liquidation process, Bitfinex has come up with an innovative recovery plan that involves a promise to “repay” customers in BFX tokens, representing the value of funds lost in the hack.

These tokens can be traded on the open market or can be held at a later date for future repayments of $1 per token, effectively allowing customers to speculate on the company’s recovery.

Later this month, BnkToTheFuture was added to the solution through a partnership with Bitfinex, allowing clients to convert their BFX tokens into equity in the company.

After about seven months, BnkToTheFuture reports that the scheme has been working, with victims recovering between 75% and 100% of their funds through the various measures available.

“In 2016, Bitfinex needed a plan to recover from their hack, and the company I co-founded, BnkToTheFuture.com, supported them and executed a recovery involving security tokens, debt and equity, and offered investors a very high The rewards. The risks they take.”

Dixon did not confirm whether his recovery plan would use the token in the same way, only that it would be addressed using a similar innovative approach.

Gamestop-style short squeeze brew

However, there is also an unofficial community-led recovery plan that appears to be gaining traction on Twitter with the hashtag #CELShortSqueeze.

The campaign attempted to intentionally inflate the price of CEL tokens by buying and withdrawing CEL tokens from various exchanges, forcing short sellers of the Celsius token to cover their short positions.

Short selling is an investment strategy in which an investor borrows shares and sells them immediately, with the aim of buying them back at a lower price later and pocketing the difference. It allows investors to profit from a decline in a stock or asset.

Short selling occurs when the value of the asset that was shorted rose instead, forcing short sellers to buy back the shares they originally sold to prevent losses from mounting. However, repurchasing shares when prices are rising could lead to further price increases, further crowding out short sellers.

Related: Crypto Biz: Crypto Massacre Pushes Celsius, Three Arrows Capital into Bankruptcy, June 9-16

In January 2021, users of the subreddit r/wallstreetbets launched the same strategy, and the U.S. video game retailer’s stock reached a high of nearly $500 per share, about 25 times its initial valuation.

Celsius dominated headlines earlier this month after the popular cryptocurrency lender suspended withdrawals due to “extreme market conditions.”

The halt in withdrawals has left customers without access to funds, and many fear that if the platform goes down, funds locked on the platform may never be seen again.

On June 20, Celsius released a statement to the Celsius community stating that its goal continues to be to stabilize its liquidity and operations.

“It has been a week since we suspended withdrawals, exchanges and transfers. We want our community to know that our goal remains to stabilize our liquidity and operations. This process will take time.”

The platform said it aims to maintain an open dialogue with regulators and officials and will continue to find solutions. Meanwhile, the platform will suspend its Twitter Spaces and Ask-Me-Anythings (AMA).

At the time of writing, Celsius (CEL) is priced at $0.636, down 92% from its all-time high.



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