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Celsius Pays Off Last DeFi Loan, Reclaims Nearly $200M of Wrapped Bitcoin From Compound
The troubled crypto lender previously paid off loans from Aave and Maker.
Updated May 11, 2023, 3:57 p.m. Published Jul 13, 2022, 4:21 p.m.
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Celsius Network, the embattled crypto lender that is facing liquidity troubles, fully paid off its remaining debt to the decentralized finance (DeFi) lending protocol Compound, freeing up nearly $200 million of pledged collateral.
The firm paid down $50 million to Compound early Wednesday and reclaimed 10,000 wrapped bitcoin (wBTC), a bitcoin-replica token retrofitted for the Ethereum blockchain. The wBTC stake is worth about $195 million at current prices.
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Data on the blockchain transaction tracer Etherscan shows that a wallet linked to Celsius transferred 50 million DAI tokens – MakerDAO's dollar-pegged stablecoin – to Compound in two instances. After the down payments, Compound released 6,900, then 3,100 wBTC tokens to Celsius that had been locked up on the protocol as collateral.
After that, Celsius transferred 10,000 wBTC to the same unlabeled wallet address where the firm's 416,000 stETH stake – some $435 million at current prices – ended up the day before.
The maneuver followed a similar treasury-management tactic that Celsius used recently to fully pay off and close its loans from the DeFi lending protocols Aave and Maker. The loans on these protocols are overcollateralized, meaning the borrower has to lock up more digital assets in value than the loan's value.
Paying off overcollateralized loans is theoretically a net positive for Celsius's liquidity because the move unlocks more assets in value than what is needed to pay down the loans.
Celsius is among the crypto lenders crippled by the recent liquidity crisis among crypto firms. The Department of Financial Regulation in Vermont, a U.S. state, alleged the lender is "deeply insolvent." The firm suspended withdrawals, cut jobs and hired restructuring advisers.
However, Celsius has been making good on its debt to DeFi protocols. Since the start of July it has paid back $223 million to Maker, $235 million to Aave and $258 million to Compound.
As a result, it reclaimed more than a billion dollars worth of its crypto assets, mostly in wBTC and a type of ether (ETH) derivative token called stETH, which had been stuck on the protocols as collateral.
After paying down the Maker loan, blockchain data showed that the firm sent almost $500 million wBTC previously reclaimed as collateral to the crypto exchange FTX.
UPDATE (July 13, 21:13 UTC): Added 4th graf with information about the firm's latest wBTC transaction and 10th graf about previous wBTC transfer to FTX.
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