Celsius Reclaims $172M Collateral From Aave, Compound

The liquidity-strapped crypto lender has paid down $95 million in debt from the two DeFi platforms since Friday.

Jul 11, 2022 at 5:57 p.m. UTC

Updated Jul 12, 2022 at 3:25 p.m. UTC

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

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Celsius Network, the troubled crypto lender that has halted customer withdrawals because of liquidity troubles, paid down $95 million of its debt to the Aave and Compound decentralized finance (DeFi) platforms.

The maneuver freed up $172 million of collateral that had been locked in the platforms as collateral. Celsius used a similar treasury-management tactic last week on the Maker platform to free up $480 million in collateral.

Data on Nansen Portfolio tracker shows that a wallet linked to Celsius transferred $35 million in DAI – MakerDAO's dollar-pegged stablecoin – and $40 million in Circle's USDC stablecoin in various transactions. The wallet also paid down another $20 million in USDC late Sunday to the Aave protocol, according to data on the blockchain transaction tracer Etherscan.
Celsius also exchanged some interest-bearing token derivatives on Aave for 1,647 WBTC ($33.4 million worth) and about $1.6 million combined of BAT and xSUSHI, a derivative of decentralized exchange SushiSwap's native token that pays interest on the exchange's staking platform.
The down payments let Celsius redeem a part of the collateral of the debt. Since Friday, the firm reclaimed 8,436 wrapped bitcoin (WBTC), which is worth $172 million at current prices. It also redeemed about $700,000 in COMP, the Compound protocol's native token.
The recent credit crisis in the crypto markets hit centralized crypto lenders hard, with Voyager Digital filing for bankruptcy protection and BlockFi seeking a credit lifeline and bailout from crypto exchange FTX. Celsius halted all customer withdrawals starting June 12 to avoid a run on its deposits, while cutting jobs and hiring restructuring experts.
Celsius, however, now appears on its way to pay off the rest of its debt to DeFi protocols to reclaim the digital assets pledged against the loans as collateral.
After the moves, the firm still owed $140 million to Aave and Compound, reduced from $235 million as of last Friday, according to DeFi data platform Zapper's dashboard.
The collateral that Celsius locked up against those loans stood at $680 million, shrinking from $950 million, and should be freed up theoretically if Celsius fully pays off rest of the debt.

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