DeFi Lender Celsius Halts Withdrawals, Sends 104,000 ETH to FTX

Key Insights:

  • Due to “extreme market conditions,” crypto lender Celsius paused all withdrawals, swaps, and transfers.
  • Celsius did not mention when it would call off the withdrawal freeze.
  • Celsius has transferred around 104,000 ETH to FTX in the past three days.

Crypto lending platform Celsius Network has been under pressure from all sides, including US state regulators. The embattled startup has drawn the ire of securities commissions from the states of Kentucky, Alabama, New Jersey, and Texas. The regulators believe the company violated security laws through its crypto “Earn Rewards” program.

Adding to it, Celsius’s native token CEL slumped after being affected by the broader crypto crash last month. The major sell-off was driven by the collapse of TerraUSD (UST) and its sister token Luna.

Now, Celsius users are facing another blow after the company paused withdrawals, swaps, and transfers, but there are conflicting reports about what actually happened.

Celsius halts withdrawals, leaving investors in shock

The crypto staking network Celsius experienced a chaotic weekend after announcing the hold on withdrawals, citing “extreme market conditions.” In the elaborate blog post, the firm said,

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Immediately following the announcement, the price of CEL fell sharply by 45% to $0.19 at press time. This triggered market stress in the sector bringing down the price of ether (ETH) to $1,237 as of press time.

The company noted that the act would “stabilize liquidity and operations” while taking steps to protect assets and benefit the Celsius community.

“We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible.”

The company did not specify an exact timeframe when it would resume withdrawal services.

What does it mean for users?

The news follows increased tension among Celsius users who vented on social media. One user spread the rumor that there is a possibility for locked Celsius accounts, “similar to Luna.”

The CEO of Celsius, Alex Mashinsky, hit back at the user denying such allegations and terming such rumors as FUD.

A sudden announcement of the temporary suspension of withdrawals has put users in a fix. Celsius community will not be able to withdraw until the company resumes its withdrawal services. However, Celsius promises customers that their accounts would meanwhile accrue interests.

Celsius Network platform, which has 1.7 million customers, offers an interest-bearing savings account, borrowing, and payments with digital assets and fiat money. This regulated lender lets users receive interest on deposited cryptocurrencies or take out crypto collateralized loans.

The mass exodus of assets

The digital assets lender has supposedly transferred around 104,000 ETH in total for the past three days to the FTX exchange today for unspecified reasons.

Moving massive amounts of ETH, wrapped bitcoin (WBTC), and freezing withdrawal services has stirred speculators. The crypto firm sent about 9,500 WBTC worth around $247 million.

One user noted that the possible reason could be to earn yields, while there are risks that it would create delta exposure. However, the exact reason for the mass exodus of assets between Celsius and FTX and the sudden suspension of withdrawals remains unknown.

The liquidity problem

Put simply, when a business does not have the liquid assets necessary to meet its short-term obligations, such as repaying loans, it faces a liquidity problem.

In this case, Celsius has been facing a liquidity crisis since last month, when CEL’s price dropped to $1 after customers complained about being unable to withdraw funds.

The firm would be trying to stabilize liquidity by replacing several volatile digital assets like WBTC and ETH, which the company withdrew from Aave.

Per the Cointelegraph report, since Sunday, Celsius has staked 204 million USD Coin (USDC) stablecoins on Aave. Additionally, the lender has deposited 10 million USDC and around 8.2 million Dai (DAI) stablecoins to Compound. 

The stablecoins re-staked by Celsius (222 million in total) is close to the value of removed WBTC assets.

Additionally, Mashinsky has been highly vocal in the recent past, blaming short-sellers on Wall Street as responsible for the overall crypto crash, including the fall of CEL and Terra network. He also recently told Kito News that the crypto markets would recover, and inflation is not a long-term concern.

TAG Heuer Partners with BitPay to Accept Crypto Payments in the US

Key Insights:

  • On Thursday, TAG Heuer announced the introduction of online cryptocurrency payments in the US.
  • TAG Heuer customers in the US can now make online purchases of up to $10,000 per transaction with the support of BitPay.
  • As a Red Bull Formula 1 Racing Team official partner, Web3 options are endless.

Since 2021, the fashion industry and luxury brands have embraced cryptocurrencies and Web3. The acceptance of cryptocurrencies for payment is a natural step into the Web 3 space.

As the transition from the real to the virtual world gathers pace, the adoption of cryptocurrencies for payment has also gained momentum.

The wider acceptance of cryptocurrencies for payment comes despite this year’s crypto sell-off. Earlier this month, Web3 advocate and luxury fashion house Gucci started accepting crypto payments in US stores.

This week, Swiss luxury watchmaker TAG Heuer joined an ever-increasing list of names to accept crypto payments.

Swiss Luxury Watchmaker Takes US Online Crypto Payments

On Thursday, TAG Heuer announced customers within the United States can make online purchases of timepieces and accessories using cryptocurrencies.

According to the announcement,

“With an increasing number of customers using or earning digital currencies regularly, TAG Heuer intends to be a key player in the imminent transformation of the e-commerce and retail spaces.”

The announcement went on to say,

“With the support of BitPay which specializes in building custom blockchain payment technology for businesses, TAG Heuer now accepts a total of 12 cryptocurrencies at checkout.”

The 12 cryptos include Bitcoin (BTC), Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Shiba Inu (SHIB), Wrapped Bitcoin (WBTC), and five USD-pegged stablecoins.

The USD-pegged stablecoins include BUSD, DAI, GUSD, USDC, and USDP.

There is no minimum spend, and US customers can purchase up to $10,000 per transaction in supported cryptos.

Frederic Arnault, CEO of TAG Heuer, said,

“We have been following cryptocurrency developments very closely ever since Bitcoin first started trading. As an avant-garde watchmaker with an innovative spirit, we knew TAG Heuer would adopt what promises to be a globally integrated technology in the near future despite the fluctuations – one that will deeply transform our industry and beyond.”

Arnault added,

“As a luxury brand, we had to ensure that our entrance into Web3 would meet our standards of excellence and thanks to our nimble teams in-house and with the support of BitPay we are able to dive into this new financial world in the best way possible. This new crypto payment feature is just the beginning of many exciting projects for TAG Heuer in the Web3 universes.”

With TAG Heuer the official partner and timekeeper of the Red Bull Racing Formula 1 Team, Web3 is a target.

Formula 1 Team Owner Red Bull Looks to Lead the Way into Web3

In March, FX Empire reported Red Bull filing digital and metaverse-related trademarks. The applications raised the prospects of a Red Bull zone in the metaverse. Here, the opportunities are endless. Fans could buy drinks, clothing, and equipment, and even experience Red Bull-sponsored extreme sports.

With TAG Heuer now embracing Web3, the Formula 1 interlink could prove a mouth-watering prospect.

Red Bull Racing Formula 1 paved the way, partnering with Tezos (XTZ) to launch Red Bull Racing Formula 1 NFTs. NFTs from the Red Bull Racing Digital Collectibles are available for sale on the Sweet marketplace.

At the time of writing, however, there were no NFTs available for sale, with the “MAX VERSTAPPEN, WORLD CHAMPION 2021” NFT sold out.

TAG Heuer’s move into the space could give Red Bull and Red Bull Racing Formula 1 an incentive to dive deeper into the virtual space.

Gucci Goes Crypto with US Stores to Start Accepting Crypto Payments

Key Insights:

  • On Wednesday, Gucci announces plans to begin accepting crypto in US stores later this month.
  • Gucci has been a trailblazer in the digital asset and virtual space.
  • Five US stores will accept payments in more than 10 cryptocurrencies, including DOGE and SHIB.

Gucci and the fashion industry have been long-standing advocates of digital assets and virtuality.

Fashion brands have ramped up Web3 activity in 2022, with some big names filing Metaverse-related trademark applications.

While some fashion houses play catch up, Gucci has been a Web3 trailblazer. News of Gucci making a move to begin accepting crypto payments aligns with the brand’s Web3 position.

Gucci to Launch Polit Program to Accept Crypto Payments in US Stores

On Wednesday, news hit the wires of Gucci launching a pilot program to begin accepting in-store crypto payments.

According to Vogue Business, Gucci will begin the pilot scheme at the end of May. Stores will share QR code links to shoppers via email to enable payments from crypto wallets.

Stores will accept crypto payments in more than 10 cryptos, including Bitcoin (BTC), Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Shiba Inu Coin (SHIB), Wrapped Bitcoin (WBTC), and five USD pegged stablecoins.

Five stores will reportedly form part of the pilot scheme, these being Gucci stores on Wooster Street (New York), Rodeo Drive (Los Angeles), Miami Design District (Miami), Phipps Plaza (Atlanta), and The Shops at Crystals (Las Vegas).

Gucci plans to extend the pilot scheme to all North American stores by the summer.

It is not Gucci’s first foray into the virtual space. In February, Gucci purchased LAND in The Sandbox (SAND). Based on Gucci Vault, attendees can buy and use fashion items in the Metaverse.

On Gucci Vault, the fashion house also launched a Discord and the Gucci Grail, and the SuperGucci NFT collections, available on OpenSea.

The relationship with Web3 started much sooner, however. In 2021, Gucci and Roblox hosted the Gucci Garden, a virtual version of a real-world installation in Italy. Gucci Garden consisted of themed rooms in commemoration of Gucci’s centenary.

For the crypto market, the increased adoption of Web3 continues to support cryptos, including SAND.

The Sandbox Price Action

At the time of writing, SAND was down 0.86% to $2.41. A bearish morning session saw SAND fall to an early morning low of $2.40.

Gucci and other big names deliver SAND price support
A move through to $2.5 would give the bulls a look at $3.0 near-term.

Technical Indicators

SAND will need to avoid the day’s $2.34 pivot to target the First Major Resistance Level at $2.55. SAND would need broader market support to return to $2.50.

In the event of an extended rally, SAND could test the Second Major Resistance Level at $2.67 and resistance at $2.70. The Third Major Resistance Level sits at $3.00.

A fall through the pivot would bring the First Major Support Level at $2.22 into play. Barring an extended sell-off, SAND should avoid sub-$2.20. The Second Major Support Level sits at $2.00.

SANDUSD 050522 Hourly
Steering clear of the pivot would support another bullish session.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. SAND sits below the 100-day EMA, currently at $2.47. This morning, we saw the 50-day EMA narrow to the 100-day EMA, delivering support. The 100-day EMA flattened on the 200-day EMA; SAND neutral.

A move through the 100-day EMA would support a return to $2.60.

SANDUSD 050522 4-Hourly
A move through the 100-day EMA would bring $3.0 levels into play.

Bitcoin, Ethereum, Dogecoin Become Eligible As Form of Rent Payment

Key Insights:

  • Jamestown has partnered with BitPay to enable crypto as a payment option for its tenants.
  • Cryptocurrencies accepted for the same include assets ranging from Bitcoin to stablecoins.
  • The crypto market itself has been losing money over the last few days.

The adoption of cryptocurrencies for facilitating payments across stores and merchants was the first step in making these digital assets a part of our regular life.

But thanks to the expanding use cases, including tax payments and payments for government services, and now rent payments, crypto will integrate itself into everyone’s life sooner than expected.

Jamestown To Accept Crypto

In an announcement today, the design-focused real estate investment and management firm Jamestown stated that it will now be accepting rent payments from its tenants in the form of cryptocurrencies.

To facilitate the same, the firm partnered with BitPay, which will act as an intermediary exchange.

Stating the reason behind enabling this provision for their tenants, the President of Jamestown, Michael Phillips, said,

“Blockchain technology and the digital assets it enables, like cryptocurrencies and non-fungible tokens, are key components to the evolution of real estate. Allowing for cryptocurrency payments is part of our commitment to innovation and larger digital asset strategy to optimize and maximize our physical real estate through technology and virtual integrations.”

Since Jamestown will not be receiving or holding cryptocurrencies directly, BitPay will convert the cryptocurrencies received from tenants into fiat.

The cryptocurrencies acceptable for the rent payments initially include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Wrapped Bitcoin (WBTC), Dogecoin (DOGE), Litecoin (LTC), and five USD-pegged stablecoins (GUSD, USDC, USDP, DAI, and BUSD).

Jamestown will be beginning by providing these services to tenants of its real estate assets throughout the United States of America. Eventually, they will also expand this service to their assets in Europe.

Would People Opt for It?

Given the state of the market, it is pretty uncertain if people would be willing to opt for paying in crypto. This could be because the market’s volatility is wildly unpredictable and can harm anyone’s holdings within a matter of hours.

For example, any tenant who purchases crypto to pay their rent the next could potentially lose their money within those 24 hours since it has happened in the past.

An instance of the same can be found in the red candle of April 26 when within 24 hours, Bitcoin, along with most of the other altcoins, lost more than 5% of its value, some even touching 12%.

Bitcoin’s price in the last few days has been very uncertain

Depreciation as such is concerning and could also keep people at bay from taking any risks.

Defi Protocols Agave and Hundred Finance Suffer Hack of $11M

Key Insights:

  • Over $11 million from Agave and Hundred Finance was wiped off in the latest Defi exploit.
  • The attacker introduced a reentrancy bug and used a flash loan exploit to siphon funds.
  • After the protocols announced the hack, their native tokens saw a dip.

Defi protocols getting hacked have been synonymous with crypto markets as crypto crimes have risen over the years. On Tuesday, another Defi exploit came to light when an attacker siphoned over $11 million from Agave and Hundred Finance.

Flash Loan Reentrancy Attacks

Over $11 million has been wiped off in what appears to be a flash loan reentrancy attack on both Defi protocols on the Gnosis chain. The hacker took the stolen funds in Wrapped ETH, Wrapped BTC, Chainlink, USDC, Gnosis, and Wrapped XDAI.

Both the Defi platforms confirmed the hacks through Twitter posts on Tuesday, stating that their contracts have been paused to avoid further damage. Agave also mentioned that their team is currently investigating the exploit on the Agave finance protocol.

The attacker exploited a reentrancy vulnerability in the two Defi protocols.

Reentrancy is a Solidity programming language vulnerability that lets an attacker trick a protocol’s contract into making an external call to an untrusted contract.

After the call happens, the hacker can use this suspicious contract to make repeated calls to the protocol to wash away its funds.

For Agave and Hundred Finance, the hacker introduced a reentrancy bug on both protocols allowing for a flash loan exploit. The same allowed hackers to continue borrowing from the protocols.

Seemingly, the attacker was making repetitive calls to withdraw funds without putting up additional collateral. Notably, the address associated with the attacker has sent over 2,100 ETH, worth over $5.5 million, to a crypto mixer to launder the stolen tokens.

Blockchain security researcher Mudit Gupta thinks that the hack was possible because the official bridged tokens on Gnosis are non-standard and have a hook that calls the token receiver on every transfer. The same enables reentrancy attacks.

Defi Attacks Rising

The recent attack marks the second flash loan exploit on the same day after Deus Finance DAO lost $3 million in a similar attack. Agave is a fork of the lending protocol Aave.

Gupta, however, believes that the difference between Aave and Agave is that ‘Aave actively checks for reentrancy before listing tokens on the main net to avoid similar attacks.’

After the attack, both the protocols’ tokens saw a price decline. AGVE, the token of non-custodial money market and lending protocol Agave, lost over 25% value on Tuesday. Likewise, after announcing the exploit, Hundred Finances’ token HND was down 5.8%.

Notably, Cream Finance, another Defi lending protocol with a similar codebase to Compound, suffered a flash loan reentrancy attack last summer. The exploit led to a $19 million loss in crypto from the protocol.

Sling TV to Accept Dogecoin and Other Digital Assets for its Subscriptions

Popular meme coin, Dogecoin, has witnessed a new addition to the list of firms accepting it as a payment method. 

Sling TV Partners With BitPay

According to available information, Sling TV has announced that it is partnering with crypto service provider BitPay, to accept crypto payment. This means that users can subscribe to the streaming service using crypto payment options.

Sling TV is a US-based streaming service owned by Dish Network and has over 2 million subscribers in the United States.

The firm’s addition of crypto payment option also means that the firm would accept payment through Litecoin, Bitcoin, Ethereum, Bitcoin Cash, Wrapped Bitcoin, and Shiba Inu. It would also accept 5 USD-pegged stablecoins, including GUSD, USDP, BUSD, DAI, and USDC.

Crypto Payment Option is Available for Existing Users Only

Presently, the crypto option would only be available to existing users as new subscribers have to first sign up for the service using American dollars. However, subsequent renewals can be made via crypto.

Also, users cannot automate their crypto payments presently. Instead, they’ll have to make a manual repayment each time the existing one expires. The manual prepayment option ranges between one to six months, so users don’t need to renew every month if they don’t want to.

Sling TV has also set up a support page that provides users with all the necessary information about paying in crypto.

The comprehensive page will guide users through the process of making payments. In addition, it will help to reduce any errors that are likely to arise for first-time users of this technology.

Sling TV’s decision to support crypto payments is part of its desire to give users more flexibility and ease of use. 

Apart from Sling TV accepting Dogecoin, Elon Musk also confirmed that Tesla will soon be accepting Dogecoin for its charging stations in the future. The carmaker is already one of the few institutions that accept DOGE payments for its products.

The growing acceptance of Dogecoin is yet to tell on its price, which is currently trading at $0.1385 after a 0.4% rise in the last 24 hours. During the last seven days, the asset’s value has dropped by over 7%.

MonoX Losses Over $30 million in WETH and MATIC

One news that never seems to get old in the decentralized finance (DeFi) scene is that of a security breach. MonoX, a DeFi project, has confirmed that it is a victim of a recent hack where perpetrators took over $30 million worth of digital tokens from its platform. 

MonoX is Exploited

The DeFi project, which provides single token liquidity pools, announced the hack on Twitter, revealing that the hackers exploited a loophole in its swap contract to boost MONO token price. This allowed them to use the coin to buy other digital assets. 

According to available data, around $18 million worth of wrapped Ether (WETH) plus around $10 million worth of Polygon (MATIC) were stolen. Other digital assets like GHST, WBTC, LINK, MIM, and IMC account for the remaining missing $3 million.

According to a statement released by the team, it would be working towards recovering the stolen funds whilst assuring its community members that the “entire team and partners are all working on this right now.” 

It continued that “Security of users’ funds is of utmost importance to us and we have had multiple security audits and a security advisor firm that work with us on an an ongoing basis”

As of press time, the attack hasn’t affected the prices of the stolen tokens, except that of MONO token which has tanked.

DeFi Hacks in 2021

While the DeFi market has witnessed more growth and adoption in 2021, one of its major albatrosses has been the spate of attacks that have resulted in lost funds for different projects this year.

A report from Elliptic, a crypto data analytics company, revealed that the space alone has lost over $10 billion to frauds, theft and, hacks.

Though there have been a number of notable hacks, that of Poly Network which lost around $610 million to an ethical hacker who later returned most of the funds claiming he only wanted to show the project the vulnerabilities in its network, remains the most significant this year.

Other attacks with fewer happy endings in the space include those on Cream Finance, Compound, Harvest Finance, and others. This has led to a call for more audits of DeFi projects to rectify vulnerabilities before they’re exploited, as unaudited projects account for around 80% of the hacks.

However, auditing alone seems not to be the solution to these attacks because MonoX stated that it had been audited by Harlborn and Peckshield yet, none of them discovered the vulnerability exploited by the hacker.

What are Lending Protocols? The Rise of DeFi Lending

The cryptocurrency space has grown to become a $3 trillion industry. Over the past decade, there have been numerous innovations within the cryptocurrency space. One of the most recent innovations is the decentralized finance (DeFi) space.

DeFi is one of the fastest-growing sectors within the cryptocurrency space. It offers numerous services to cryptocurrency investors and other market players. Due to its importance, this post will touch on an aspect of DeFi, which is lending.

What is DeFi?

DeFi can be defined in simple terms as decentralized finance. This is an ecosystem of financial applications built on top of blockchain technology. Unlike the regular financial ecosystem, the DeFi space operates without any third part of central authority.

Instead, DeFi relies on a peer-to-peer network to establish decentralized applications that would allow people to connect and manage their assets regardless of their location or status. DeFi aims to ensure people gain access to open-source, transparent and permissionless financial services from every part of the world.

The decentralized finance ecosystem is built on smart contracts. Smart contracts are self-executing and don’t require a third-party intermediary. DeFi started on the Ethereum network. Hence, it is not a surprise that most of the DeFi protocols are built on the Ethereum blockchain.

Understanding DeFi Lending

DeFi lending occurs thanks to the lending platforms or protocols. These platforms offer cryptocurrency loans in a trustless manner, allowing the holders to stake the coins they have in the DeFi lending platforms for lending purposes.

On the DeFi platform, a borrower can take a loan, allowing the lender to earn interests once the loan is returned. The lending process is executed from the start till the finish without intermediaries.

A coin holder sends the tokens they intend to lend into a pool using a smart contract. Once the coins are sent to a smart contract, they become available to other users to borrow. Afterward, the smart contract issues tokens (usually, the platform’s native token) that are doled out automatically to the lender. The tokens can be redeemed at a later stage in addition to the underlying assets that were sent to the smart contract.

Virtually all the loans issued via the native tokens are collateralized. This means that users who wish to borrow funds will need to provide a guarantee. However, unlike the centralized financial system, the guarantee in the DeFi space is in the form of cryptocurrencies that are worth more than the actual loan itself.

On paper, this idea might seem absurd as the borrower could potentially sell their assets in the first place to generate the money. However, there are numerous reasons why DeFi borrowing makes sense.

For starters, the users might require funds to take care of unforeseen expenses they may have incurred and don’t intend to sell their holdings as they believe the assets are due to an increase in value in the future. Furthermore, by borrowing money via DeFi protocols, users can avoid or delay paying capital gains taxes on their cryptocurrencies. Also, individuals can use the funds they borrow from the DeFi protocols to increase their leverage on some trading positions.

What are the Popular DeFi Lending and Borrowing Protocols?

Maker

Maker is one of the leading and unique DeFi crypto lending platforms. It allows users to borrow money via its DAI tokens. DAI is a stablecoin whose value is pegged to the US Dollar. Using the Maker protocol is available to anyone. Users can open a vault, lock collateral like ETH or other cryptocurrencies and generate DAI as a debt against the locked collateral.

The Maker protocol encourages users to take part in operational earnings via governance fees, acting as interest rates for the platform. MKR is the native token of the Maker protocol, and its holders serve as the last line of defense in the event of a black swan. As soon as the collateral value starts to decrease, MKR is minted and sold in an open market to raise more collateral. Hence, diluting MKR holders.

Aave

Another leading DeFi lending protocol is Aave. This is an open-source platform and one of the most popular DeFi lending protocols in the crypto space. Aave is a non-custodial liquidity platform for earning interests on deposit and borrowing assets. It allows the lenders to deposit their cryptocurrencies in a pool and receive an equivalent amount of aTokens, its native token. The protocol algorithmically adjusts interest rates based on demand and supply, indicating that the more a user holds aTokens, the higher the interest amount.

AAVE/USD chart. Source: FXEMPIRE

Compound

Another popular DeFi lending protocol is Compound. This is an algorithmic and autonomous money market protocol designed to unlock numerous open financial applications. Compound allows users to deposit cryptos, earn interests and borrow other cryptocurrency assets against them. By using smart contracts, Compound automates the management and storage of capital on the protocol.

As a permissionless protocol, anyone with a cryptocurrency wallet and an internet connection can interact with Compound and earn interest. Metamask is one of the wallets that support the Compound DeFi protocol. The Compound protocol supports the lending and borrowing of numerous assets, including DAI, ETH, WBTC, REP, BAT, USDC, USDT and ZRX.