As we will explore in this article, does the full timeline of the Celsius crypto crash reach all the way back to 2021?,
The Celsius Network halted all withdrawals today, preventing its users from taking their crypto deposits and yield off of the Celsius platform, and setting off speculation about the company’s solvency. Clearly there are liquidity issues or they would not have suspended withdrawals, it remains to be seen whether they have enough assets to pay out on all of their liabilities once the dust settles.
What are the events that led up to this crisis? Here is a full timeline of events that you will not get anywhere else:
- October 2021 – New York Attorney General (AG) sends letters to crypto yield savings platforms: Nexo, Celsius, and others,
- February 2022 – Nexo abandons US accounts
- April 2022 – Celsius abandons US accounts
- May 2022 – Celsius withdraws $0.5 billion from Terra/Luna
- May 2022 – Terra/Luna crashes
- June 2022 – Celsius suspends all client withdrawals
October 2021 – New York AG sends “Cease and Desist” letters to 2 crypto yield platforms
Letitia James, the New York state Attorney General, sent Cease and Desist letters to two crypto lending platforms and requested information from three other platforms. It appears that Nexo was the target of one of the C&D letters and that Celsius was the target for one of the requests for information. The other companies are unknown at this point.
February 2022 – Nexo abandons US accounts
Nexo prevents US customers from using its flagship “Earn Interest Product”, saying:
“Nexo’s Earn Interest Product in its current form will not be available for new clients, until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are finalized, as per the recently received guidance.”
Nexo official subreddit
April 2022 – Celsius abandons US accounts
Shortly after Nexo, Celsius follows suit and prevents US clients from earning yield on their platform. In an announcement on the official company blog they say:
As we previously have acknowledged, Celsius has been working closely with regulators around the world. It is our intention to be as transparent with our community as possible. More specifically, we have been in ongoing discussions with United States regulators regarding our Earn product. As a result, there will be changes to the way our Earn product will work for users based in the United States.
Celsius official company blog
And more crucially:
New transfers made by non-accredited investors in the United States will be held in their new Custody accounts and will not earn rewards. Non-accredited investors can continue to swap, borrow, and transfer within their Custody accounts based on their local jurisdiction.
Celsius official company blog
May 2022 – Celsius withdraws $0.5 Billion from Terra/Luna
In May, Celsius made the decision to pull all $0.5 Billion USD from Terra’s Anchor protocol that was paying 17-19% yields. See Block Crypto’s writeup on that event.
May 2022 – Terra/Luna Crashes
The Terra/Luna algorithmic stable coin system crashes, precipitating a broader crash in the crypto markets. See our full writeup and analysis of that event.
June 2022 – Celsius suspends all client withdrawals
Celsius takes the drastic move of suspending all client withdrawals from its platform. This clearly indicates Celsius is facing a liquidity crisis and potentially a solvency crisis given the broader crypto market crashes of 20+% caused by Celsius’s action to halt withdrawals.