As lending platform Celsius finds itself compromised since it shut down its withdrawal, swap and transfer services this morning, direct competitor Nexo has offered to buy back some of its receivables in exchange for a compromise. This comes at a particularly fragile time for the cryptocurrency ecosystem, and it may well be that Celsius will continue to sink.
Nexo is looking to acquire assets held by Celsius
While early this morning the Celsius platform announced that it was pausing its cryptocurrency withdrawal, swap, and transfer services, citing “extreme market conditions,” its direct competitor Nexo has expressed interest in acquiring some of its assets.
“After seeing what appears to be the insolvency of CelsiusNetwork and mindful of the implications for their retail investors and the crypto community, Nexo has made a formal offer to acquire CelsiusNetwork’s qualified assets after their withdrawal freeze.”
Via an open letter (available in the quoted tweet), Nexo is offering Celsius, in broad strokes, to acquire some or all of its incurred claims in exchange for, among other things, its customer database.
At the time of writing, the proposal has been rejected by Celsius, but it will remain valid until June 20.
Alongside its offer, Nexo has claimed that its financial situation is risk-free, hoping to reassure the crypto community in the midst of a strong period of uncertainty. In an interview with our peers at CoinTelegraph, a Nexo representative said that the company was one of the most transparent:
“[Nexo was] the first cryptocurrency lender to publicly disclose its real-time books of account last September, and we have invited all of our competitors and responsible cryptocurrency platforms to follow our lead.”
A decision by Celsius not without consequences
The market reaction to the announcement of Celsius was not long: within half an hour, the price of the CEL token lost more than 75% of its value, from 0.36 to 0.09 dollars. It then recovered slightly, with a current price of $0.2.
Celsius is a platform that consists of generating returns on its customers’ investments. It does this by lending cryptocurrencies to businesses via deposits from its own customers, who are themselves rewarded for lending.
This is a similar model to Nexo or BlockFi, for example. This is also one of the reasons for Nexo’s strategic proposal, which is to distance itself from one of its main competitors.
However, it is a model that is far from being unanimously accepted, especially in the United States. Coinbase was forced to stop offering its lending service in the United States following threats of legal action by the Securities and Exchange Commission (SEC).
Some Twitter users have not failed to compare the recent position of Celsius to the one that preceded the collapse of Terra (LUNA) or the Bitconnect Ponzi scheme, which continues to be talked about more than 5 years later.
