Celsius Repays MakerDAO; Wins Back $450 Million Collateral

The Celsius Network won the return of $450 million in collateral from MakerDAO on Thursday after it completed loan repayments to the protocol.

The company paid $41.2 million in DAI as a final installment on the loan, according to blockchain data, allowing it to claw back 21,962 in wrapped bitcoin (wBTC) the protocol held as collateral. The loan was worth more than $270 million on June 12, the day Celsius announced it was freezing customer accounts in a bid to survive. It narrowly escaped a margin call days later, making repayments and dropping its bitcoin-liquidation price from roughly $22,000 to about $15,000. Bitcoin’s price sank to around $17,600 on June 17.

A tracker maintained by Defi Explore indicated that Celsius lost more than $1 billion on its MakerDAO transactions, investing a lifetime total of $1.8 billion while withdrawing just $757.6 million.

Celsius Hires Citigroup; Seeks to Survive a Margin Call When Bitcoin Hits $15,100

The distressed crypto-lender and exchange retained advisors including law firm Akin Gump Strauss Hauer & Feld LLP and advisory firm Alvarez & Marsal in June to assist it in determining whether to restructure or file for Chapter 11 bankruptcy. It also hired Citigroup to investigate “potential financing” to help avoid or mitigate the damaging effects of either option.

Despite reacquiring the nearly half-billion in collateral, Celsius remained silent on Thursday on whether it would return its customers’ funds. The company used customer assets to invest in other products for high-interest yields, a practice known as “rehypothecation.” Its terms of service define most customers as “unsecured creditors,” meaning that in the event of an insolvency proceeding, their assets will be used to pay the company’s debts to other lenders.

Celsius said in May that it serviced 1.7 million users around the world and managed $11.8 billion in assets.

Neither Celsius nor CEO Alex Mashinsky, who was vocal on Twitter prior to the company’s financial difficulties, acknowledged its completion of repayments on Thursday. The company made its most recent statement on June 30, when it said it was “focused and working … to stabilize liquidity and operations, in order to be positioned to share more information with the community.”

That statement came days after rumors that officials had blocked Mashinsky — a dual citizen of the U.S. and Israel — from leaving the U.S.