After the state lawsuits mentioned at top of this article, their lend product is now only available to accredited investors, but it took a few years.Ĭelsius does not only connect depositors and borrowers and provide an avenue for investors to lever up and short, they effectively operate like a private equity business with a handful of alternative cryptocurrency investments.įor instance, they recently purchased a cryptocurrency farm, they stake nodes on Proof-of-Stake chains, provide money to DAOs, provide short selling inventory to hedge funds or exchanges, and they trade around their custom CEL token.
This is was essentially a loophole for a firm like Celsius to get around accredited investor status, which excludes most of the country from participating. They are able to get around the typical banking and money manager rules because they do not deal with USD fiat their business is strictly cryptocurrency only, which the IRS has ruled to be property, so even USD stablecoins don’t qualify as money.
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This status offers Celsius the opportunity to engage in a lot of alternative cryptocurrency investments free from regulatory restrictions that would weigh down typical fiduciary investment managers. The interesting thing about Celsius is that in the US, they are a private, unregulated investment business, not subject to the same rules that would apply normally to a typical bank, investment manager, or publicly traded company. Overall I think these kinds of businesses are good for cryptocurrency adoption, if they don’t implode eventually, that is. The Celsius Network platform also provides the opportunity to lever up a position or short a position, so in a lot of ways they make markets more complete as they unlock capital and fulfill various needs that were not possible before. Depositors can turn their cryptocurrency into a yield bearing assets and borrowers can convert some of their gains into usable cash without incurring a taxable liability. It can sometimes be a very long wait when a cryptocurrency bear market hits and lasts for several years.Ĭelsius and a few others including Nexo and BlockFI realized that all these capital assets are just locked away and not doing anything productive and came up with the idea of a marketplace for lenders and borrowers, similar to a bank. If you need a primer on Bitcoin and cryptocurrency, please read this first.Ħ Celsius Review Summary: Is Celsius a Good Investment? What is Celsius Network?Īs cryptocurrency has expanded in usage over the last few years, plenty of people have purchased Bitcoin, Ethereum and other coins and have just left them sitting in a wallet for years waiting for them to appreciate as part of their investment portfolio. They may grow into their shoes with a profitable business in the future but there is a long lag that follows the operating year for their official reports which makes investors fly blind in the meantime.įurthermore, there are some unique risks and potential red flags that we will discuss that retail investors might not be getting compensated for when placing their cryptocurrency assets onto this platform. The main concern is that the latest financial reports published in Oct 2021 show that they have been operating as a technical Ponzi scheme, and we show the details from those reports in a later section. I wanted to like them for those juicy 8.5% yields, but there are just too many issues for me to risk capital on this platform.
In this article I give an honest review of the platform and point out a variety of red flags. If you’ve been involved with crypto you’ve probably encountered the handful of Centralized Finance (CeFi) platforms like the Celsius Network.
Axos bank is the highest yielding savings account in the US with only a 0.61% APY, so naturally people are willing to take larger risks for the alternative investment platforms advertising 8-10% rates. In this article, I continue my review of alternative investment platforms that have been proliferating because with interest rates low for so long, people have been desperate for investment returns. This follows the SEC enforcement and $100 million penalty applied to BlockFi which previously offered the same product ( Nexo stopped offering their crypto earn product to USA users on the same day as BlockFi). USA users will no longer earn interest on newly deposited funds at Celsius unless they are accredited investors after several state lawsuits.
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