On June 14, Celsius, a cryptocurrency firm in the business of lending, added over 2,000 Wrapped Bitcoin (WBTC) to its collateral out of which 1,501.77 WBTC are deposited and other 499.99 WBTC are placed in its vault. The current move from Celsius is regarding its effort to increase the liquidation price of its assets due to the crypto bloodbath. It has been trying to replenish its collateral on Maker. In a tweet today, Celsius has informed the community that their major objective continues to be acting in the best interests of our community. In this regard, the company is working as rapidly as possible and will post details when it becomes available.
.@CelsiusNetwork is working as quickly as possible and will share information as and when it becomes appropriate. Acting in the interest of our community remains our top priority.
— Celsius (@CelsiusNetwork) June 14, 2022
A swift collateral top-up with over 2,000 WBTC has rescued Celsius from a mass liquidation, which might have been disastrous for the firm and the whole cryptocurrency market.
What goes wrong with Celsius?
The firm was already struggling with a liquidity issue caused by the de-pegging of stETH and ETH. In continuation, Celsius also fell exposed to another liquidation due to its enormous reliance on the Maker protocol. Celsius has created a loan on Maker in order to provide low-interest borrowing for its members, putting up around 20,000 Wrapped Bitcoin (WBTC) as collateral.
The benefit of adding over 2,000 WBTC
The addition of over 2,000 WBTC in the company collateral has provided additional time and delay in liquidations on loans as much as possible. After the addition of over 2,000 WBTC, the liquidation price for its WBTC collateral is currently $16,852.58, which is almost 24% less than the current price of BTC.
Earlier, the Bitcoin hit $20,272, the position would begin to liquidate, putting Celsius in jeopardy of failing to repay its obligation. On June 13, the platform has little less than $479 million in collateral locked up on Maker. On that day, Celsius put 4,041.48 WBTC into its vault and decreased its liquidation price to under $20,300.
Despite the very last efforts to avoid insolvency, Celsius is in serious difficulty. To address the issue that yesterday, Celsius banned withdrawals, transfers between accounts, and swaps.
.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
— Celsius (@CelsiusNetwork) June 13, 2022
Many have questioned its move to top up its collateral rather than refund its loan on Maker, claiming that the increased collateral might have been used to cover any number of its other debts. There are concerns around Celsius’ capacity to repay its clients’ debts and its leveraged holdings, due to dropping BTC and ETH and falling collateral as a result.
 to its collateral, 1,501.77 WBTC are deposited and other 499.99 WBTC are placed in vault){kind=link}