Celsius lead investor BnkToTheFuture and co-founder Simon Dixon have offered to help the network by rolling out a similar “financial innovation” used in 2016 to save cryptocurrency exchange Bitfinex from liquidation.

Although Dixon’s statement from Saturday, June 18 did not include specific details of the proposed stimulus package to Celsius’s board and CEO, Alex Mashinsky, Dixon noted that it would be similar to that proposed to Bitfinex after his hack in August 2016, which he says was solved in nine months.

“I believe mainstream finance will not have a timely solution for Celsius as we have seen in the past with Mt. Gox which still remains unresolved 10 years later. I believe this can only be resolved with a solution using financial innovation like we did with Bitfinex that was solved in 9 months and worked very well for depositors.

Dixon noted that as a shareholder and lender to Celsius, and due to “the short-term systemic impact on those who own Bitcoin,” he was “eager to support Celsius with a stimulus package.”

“It’s my position to offer solutions because we have the experience, the licenses and the technology to do so,” he said.

BnkToTheFuture is a global online investment platform that allows investors to invest in fintech companies, funds and other new alternative financial products. The platform boasts a network of over 85,000 qualified investors. In June 2020, Celsius launched a stock offering with the investment platform, raising $20.46 million from 1,039 investors.

The Bitfinex Solution

Dixon’s plans for Celsius draw on his firm’s solutions in August 2016, after Bitfinex announced it lost around 120,000 Bitcoin (BTC) in a cybersecurity breach, resulting in a loss of around $72 million in funds. customers at the time.

Rather than pursuing liquidation proceedings, Bitfinex instead offered an innovative stimulus package, which involved “refund pledges” in the form of BFX tokens to customers, representing the value of money lost in the hack.

These tokens were tradeable on the open market or could be held later for future redemption of $1 per token, and effectively allowed customers to speculate on the company taking over.

Later that month, BnkToTheFuture added to the solution by working with Bitfinex to allow customers to convert their BFX tokens into shares in the company.

Around seven months later, BnkToTheFuture reported that the plan had worked, with victims recovering between 75% and 100% of their funds through the various measures available to them.

“In 2016, Bitfinex needed a plan to recover from their hack and the company I co-founded, BnkToTheFuture.com, backed them and executed a takeover that involved security tokens, debt and equity. own and gave investors a very high return for the high risk they took.

Dixon did not confirm whether his recovery plan would work the same way with a token, only that it would be solved using similar innovative methods.

Gamestop-style short-press brewing

However, there is also an unofficial community-led recovery plan that seems to be gaining traction on Twitter under the hashtag #CELShortSqueeze.

The move attempts to force short sellers of the Celsius token to cover their short positions by deliberately increasing the price of the CEL token through mass buying and withdrawals of the CEL token from various exchanges.

Short selling is an investment strategy in which an investor borrows stocks and sells them immediately, with the goal of buying them back later at a lower price and pocketing the difference. It allows an investor to profit from a decline in a stock or asset.

Short-squeezing occurs when a shorted asset goes up in value, causing short sellers to buy back the shares they originally sold in order to prevent their losses from piling up. However, buying back shares when the price is rising can lead to further upward price movements, which can then further crowd out short sellers.

Related: Crypto Biz: Crypto Carnage Pushes Celsius and Three Arrows Capital Closer to Insolvency, June 9-16

The same strategy was initiated by users of the r/wallstreetbets subreddit in January 2021, which saw shares of the American video game retailer hit highs of nearly $500 per share, around 25 times the valuation at the start of the month. .

Celsius dominated headlines earlier this month after the popular crypto lender suspended withdrawals due to “extreme market conditions”.

The halt in withdrawals deprived customers of their money, with many fearing that funds locked on the platform would never see the light of day again, if the platform went bankrupt.

On June 20, Celsius issued a statement to the Celsius community, noting that its continued goal of stabilizing its liquidity and operations.

“It has been a week since we suspended withdrawals, exchanges and transfers. We want our community to know that our goal continues to stabilize our liquidity and operations. This process will take time.

The platform said it aims to maintain an open dialogue with regulators and officials and will continue to find a solution. During this time, the platform will suspend its Twitter and Ask-Me-Anythings (AMA) spaces.

Celsius (CEL) is priced at $0.636 at the time of writing, down 92% from its all-time high.

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