Celsius is on the Brink of collapse. Here’s what happened

Celsius got people on side by claiming that banks suck, and that Celsius could offer more returns on your investment. A lot more! up to 18%

Celsius CEO Alex Mashinsky explained this with an archaic analogy of borrowing a cup of sugar from your neighbour, and then later giving back the cup with a tablespoon extra. That’s great, but where does this extra spoon of sugar come from? That is where the whole problem lies, because Celsius were taking massive risks to get that extra spoonful of sugar.

Celsius took out multiple loans on the coins that people invested with them, meaning they could combine and stack the returns. Like using someone else’s money as a downpayment, it’s a problem when they want their money back!

Another risky Celsius strategy was depositing their customer’s ethereum into a potentially profitable locked contract, which doesn’t allow access to that ethereum for a long time. In exchange, Celsius was given a particular token as a receipt. Celsius used this token as collateral to borrow against, but the value of that token has since dropped. Also, Celsius lost the keys the contract, so millions of dollars in customer Ethereum, is essentially lost.

Celsius’ insistence on using risky strategies worked fine as long as new customers kept depositing more money, but now that people want their money back, Celsius can’t deliver, and froze all withdrawals across the platform.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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