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Celsius Network, a troubled cryptocurrency lender, recently utilized the services of institutional-grade staking provider Figment to stake approximately $75 million worth of ether (ETH), as evidenced by blockchain data.
Celsius Teams Up with Figment for $75 Million ETH Staking During Restructuring
According to Arkham Intelligence, a crypto intelligence firm, Celsius transferred 40,928 ETH in fourteen transactions between May 10 and May 12. The funds were sent to an aggregation smart contract identified as Figment ETH2 Beacon Depositor 1, which eventually forwarded them to Ethereum’s proof-of-stake Beacon chain’s deposit contract.
It is important to mention that Figment functions as a non-custodial service, allowing Celsius to maintain control over the deposited digital assets. A representative from the company confirmed this through an email. This transaction signifies one of the most significant fund transfers for Celsius since the initiation of Chapter 11 bankruptcy protection in July.
Celsius faced financial difficulties following the collapse of the Terra blockchain project and the subsequent cryptocurrency market downturn last year. These circumstances forced the company to freeze user withdrawals.
Currently undergoing restructuring, Celsius is set to be sold, alongside its assets, in an auction overseen by the bankruptcy court. Interested investors, including digital asset investment firm NovaWulf and private equity giant Apollo Global Management, have shown interest in acquiring the company.
Celsius intends to generate rewards on its digital asset holdings through the utilization of a staking service while undergoing a restructuring process. Figment promotes Ethereum staking, which boasts an average annualized staking reward of 5.6%.
Interestingly, Celsius operates one of the largest ETH staking pools, managing approximately $290 million in assets. The decision to stake with Figment instead of their own pool came as a surprise, according to Tom Wan, an analyst at digital asset investment product firm 21Shares.
It is worth noting that Celsius last made a deposit into its own staking pool in April of the previous year, long before the withdrawal freeze and bankruptcy filing. Additionally, Celsius holds approximately $750 million worth of Lido Finance’s liquid staking derivative token stETH, which allows them to earn rewards on those holdings.
Celsius Struggles with Legal Battles and Restructuring Amid Crypto Turmoil
Celsius has been entangled in legal battles and financial challenges. Following its bankruptcy filing on July 14, 2022, the company has been actively seeking ways to restructure and recover amidst allegations of operating as a Ponzi scheme. Additionally, former CEO Alex Mashinsky has found himself facing legal troubles of his own.
In January 2023, Mashinsky was sued by New York Attorney General Letitia James, known for her involvement in the lawsuits against Tether and Bitfinex, on charges of defrauding investors. The lawsuit alleged that Mashinsky misled investors and misused funds.
Subsequently, in February 2023, Mashinsky faced another lawsuit from creditors who claimed that he and other executives cashed out their holdings before the platform’s collapse, leaving creditors empty-handed.
While the implications of Celsius staking significant amounts of ETH, both with Figment and elsewhere, are yet to be determined, there have been some recent developments in the company’s restructuring.
The Southern District of New York has approved a restructuring plan that will enable approximately 85% of Celsius customers to recover 72.5% of their cryptocurrency holdings from the platform. This approval provides some hope for affected customers who have been eagerly awaiting resolution amidst the ongoing legal and financial turmoil.
The situation surrounding Celsius and its legal battles continues to evolve, and it remains to be seen how the company will navigate these challenges and address the concerns raised by investors and creditors. The outcome of these proceedings will have significant implications not only for Celsius but also for the broader crypto-lending industry.
Celsius Takes Strategic Steps with Ethereum Staking Tokens Amid Withdrawal Speculation
Celsius appears to be taking quick action in relation to its Ethereum staking tokens. Recent activity suggests that Celsius is transferring its staked Ether (stETH) from the Lido liquid staking platform, which has recently enabled withdrawals.
On May 15, a notable transaction took place on Celsius wallets, involving the transfer of 428,015 stETH to the Lido staked Ethereum wallet. This substantial amount, valued at $781 million at the time of the transfer, has sparked speculation that Celsius is preparing for withdrawal.
Further on-chain data indicates that Celsius conducted a test withdrawal of 0.1 stETH a few hours later.
Simon Dixon, a Bitcoin pioneer and Celsius creditor, suggested that Celsius may be considering direct staking without relying on Lido as an intermediary. He also proposed the possibility of the transferred stETH serving as loan collateral for Celsius’ restructuring plans.
Additionally, Celsius made a transfer of 40,928 ETH to a smart contract named “Figment ETH2 Beacon Depositor 1,” as highlighted by blockchain intelligence firm Arkham Intelligence. Subsequently, on May 12, the funds were moved to the Ethereum Beacon Chain deposit contract, according to Etherscan.
Following the recent implementation of a protocol upgrade to version 2, Lido has enabled withdrawals starting from May 15. Lido, which imposes a 10% staking commission, currently holds approximately 6.27 million ETH, valued at around $11.3 billion, accounting for 29% of all staked Ether (ETH).
According to the data provided by on-chain analytics firm Nansen, the withdrawal queue presently contains 54,046 ETH, excluding the amount held by Celsius.
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