Celsius Pulled Half A Billion Dollars From Anchor Protocol Amid Terra Chaos
Crypto lending firm Celsius had at least half a billion dollars in funds parked in Anchor Protocol, but appears to have withdrawn it all in a frantic 24-hour period earlier this week.
Wallets controlled by Celsius have sent at least 261,000 ETH ($535 million at current prices) to Anchor Protocol in the past five months, according to analysis conducted by The Block Research and Hoptrail, a blockchain data firm. The same analysis and comments from a person familiar with the matter, however, suggest that Celsius may have withdrawn all of these funds.
Celsius allows retail investors to earn interest on their crypto holdings, advertising interest rates of up to 17%. According to its website, the company serves 1.7 million customers.
Terra’s peg protocol has offered returns of up to 20% to depositors of TerraUSD (UST), Terra’s native algorithmic stablecoin. The Terra ecosystem was thrown into chaos earlier this week when The UST has strongly disengaged the price of one US dollar, putting Anchor Protocol under major pressure. The Terra blockchain was arrested twice May 12.
Celsius deposits began on December 19, with 146,000 ETH deposited until March 17. The pace then picked up, with a new 115,000 ETH deposited between April 6 and May 3.
But the company seems to have escaped before the collapse of UST. Early May 11, with Terra Tokens plummetingthe lender withdrew some 225,000 ETH (or $463 million) from Anchor Protocol, according to analysis by The Block Research.
While The Block Research was unable to determine if the remaining funds were withdrawn, a person with direct knowledge of the situation said that there were no outstanding Celsius funds remaining with Anchor Protocol, which implies that the remaining 36,000 ETH (or $74 million) has also been withdrawn. .
Celsius itself off the next tweet May 11.
As part of our responsibility to serve our community, @CelsiusNetwork implemented and adheres to strong risk management frameworks to ensure the safety and security of assets on our platform.
All user funds are safe. We continue to be open for business as usual.
— Celsius (@CelsiusNetwork) May 11, 2022
“Celsius was relatively OK because they used Bonded ETH (bETH) as collateral to borrow the UST, which was then loaned to Anchor for the return. In the current situation, it turned out to be safer than to buy USTs in the market,” said Igor Igamberdiev of The Block Research. He pointed out that his analysis represented a lower estimate of Celsius deposits and withdrawals on Anchor Protocol.
The process of depositing funds at Anchor Protocol was complicated. Igamberdiev explained that it was first about staking ETH using Lido to receive ETH Staked (stETH); then send stETH to Anchor Vault on Ethereum in order to mint and send bETH (a symbolic representation of stETH) to Wormhole, a crypto bridge; hit bETH on Terra using Wormhole; before finally depositing bETH on Anchor Protocol.
Igamberdiev added that funds withdrawn from the anchor protocol by Celsius in the form of Lido stETH were sent to Aave v2, another lending protocol.
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