Bitcoin has had a very nasty dip, and Celsius Network seems to be at fault. But is it? A string of events leading up to the current market crash shows that Celsius is actually the victim of a bloody game of revenge. Who is suffering? Retail investors, of course.
Here is the story so far.
Alameda Research vs. Celsius Network: The Backstory
After the TerraLuna debacle, calls were made, and deals were cut to try and save the UST peg. Celsius was among some of the companies allegedly in deals to rescue the UST peg. However, Celsius’ founder, Alex Mashinsky, refuted this claim in a Twitter post. Celsius suffered the lowest losses in the Terra Luna incident.
On the other hand, the other companies, namely Alameda (FTX), 3 Arrows Capital, Galaxy Digital, and Jump Capital, continued holding and suffered huge losses. Jump Capital and 3 Arrows Capital combined bought $1 billion worth of LUNA. These tokens would be unlocked linearly(25%) at each year’s end.
Jump Capital wrote a detailed report blaming Celsius for the lost funds and the de-pegging of UST. Other notable figures that joined this campaign were Dr. Julian Hosp, CEO of Cake DeFi, and Sam Trabucco, one of the most influential crypto traders and CEO of Alameda Research.
The Evidence:
Dylan Leclair of the Bitcoin magazine tweeted on June 13 about possible collusion against Celsius. His evidence was on-chain data of Alameda dumping massive amounts of staked Ethereum (stETH) once they knew Celsius Network was holding with this asset. This dump caused stETH to depeg from Ethereum. It was an attempt at assassination by liquidation.
Blockchain evidence shows FTX exchange, owned by Alameda Research, was the largest stETH dumper.
Wait, There’s More Dirt
In addition to the on-chain data, Alameda Research has powerful backers from traditional finance. Moreover, Sam Bankman-Fried has connections with powerful people in the United States government. Cory Klippsten, CEO of Swan Bitcoin, and Mike Alfred, continually bashed Celsius for over a month leading up to the liquidity crisis.
Celsius Network lost customers because of his tweets, while Klippsen got new customers. Mike Alfred delivered very low blows to Celsius, calling it a Ponzi scheme and comparing it to the likes of Luna. Celsius network was up against some powerful whales and VCs.
Among other FUD, terms like insolvency, bankruptcy, collapse, imminent implosion, and accelerating failure were thrown around with regard to the Celsius network. The 50,000 stETH dump from Alameda caused a stETH: ETH depeg to 0.94. This planned de-pegging was further used to support the idea that Celsius is probably insolvent.
Alameda Research is allegedly still buying back stETH at a discount and dumped Ethereum for a profit. It would seem that the attack is not over until Celsius is completely liquidated out of their stETH positions. The large BTC withdrawals and Ethereum dump caused a cascade effect on the entire market that sent it crashing down.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.
