After the downside of Celsius, the popular Crypto lender, about terminating all operations on its platform, due to extreme market conditions, which added to the downfall of the token.
Celsius has now come up with a recovery plan, thanks to Celsius’ lead investor BnkToTheFuture and its co-founder Simon Dixon, who have offered to assist the CEO, Alex Mashinsky, and the Board at Celsius, in bringing the network back to normal, by offering the same financial innovation used by Bitfinex after its bitcoin hack back in August 2016 to save the cryptocurrency exchange from liquidation, by paying back customers for their losses through tokens linked to the recovery of the platform
Dixon Announced Celsius Recovery Plan
Dixon announced the recovery plan on Saturday, June 18, although he did not add any distinct details about the recovery plan that will be offered, he only gave the hint that the plan would be “financial innovation” similar to that offered to Bitfinex in August 2016, and also affirmed that this plan solution, helped Bitfinex resolve its issue within nine months.
“I believe traditional finance will not have a timely solution for Celsius as we saw in the past with Mt. Gox that remains unresolved 10 years later. I believe that this can only be solved with a solution using financial innovation as we did with Bitfinex that was resolved within 9 months and worked out very well for depositors.” Said Dixon.
Dixon also pledged that as a Celsius shareholder and lender, and also due to the “short-term systemic impact on those that own Bitcoin,” he is bent on supporting Celsius with a recovery plan. He said: “It’s my position to offer solutions as we have the experience, licenses, and technology to do so,” he stated.”
Celsius Recovery Plan Inspired By Bitfinex
The idea of Dixon’s recovery plans for Celsius was taken from his company’s solutions in August 2016, after Bitfinex announced its hack of losing roughly 120,000 Bitcoin (BTC) to a cybersecurity breach, which caused a loss of around $72 million worth of customers’ funds at the time.
Instead of Bitfinex going after liquidation proceedings, after the extreme loss, it only tried to come up with an innovative recovery plan instead. This plan was about “promises to repay” users who lost funds amid the breach, in BFX tokens, to embody the value of the funds they lost to the hack. Users could cash out with the BFX tokens either by trading them on the open market or holding them for a future pump to $1 per token. This also gave the users hope on if the company would eventually recover.
Later that month, BnkToTheFuture, a global online investment protocol that enables investors to invest in fintech companies, funds, and other new resorts in financial products, came to be a plus to Bitfinex solution, by working with Bitfinex to allow customers to convert their BFX tokens into assets in the company.
About seven months later, BnkToTheFuture reported that the plan actually worked and that victims of the lost funds recovered about 75% to 100% of their funds through the different methods available to them.
“In 2016, Bitfinex needed a plan to recover from their hack and the company I co-founded, BnkToTheFuture.com, supported them and executed a recovery that involved security tokens, debt, and equity and gave investors a very high return for the high risk they took.”
Although Dixon only confirmed that this recovery plan for Celsius would be solved using parallel innovative strategies just as Bitfinex did, he hasn’t confirmed if it would also work well with tokens.
Gamestop-Style Short-Squeeze Brewing
Just during this whole coming up with a recovery plan thing, there’s already also an unofficial community-led recovery plan on Twitter, which apparently is gaining engagements under the hashtag #CELShortSqueeze. This community aims to urge short-sellers of the Cel (Celsius) token to cover their short positions by deliberately making the price of the CEL token rise high in value through mass purchases and withdrawals of the CEL token from numerous exchanges.
Short-selling is an investment strategy whereby an investor borrows shares and sells them back instantly, with the aim of buying them back later when the price is lower and profiting from the difference.
Short-squeezing happens when an already shorted asset rises in value, forcing short sellers to buy back the shares they initially sold so as to keep their losses from mounting. However, buying back shares when there’s a price rise can eventually cause more upward movements in price, which can then also cause the squeeze out of short-sellers.
subreddit r/wallstreetbets users started this strategy back in January 2021. The strategy helped stocks of the U.S video game retailer called GameStop Corp. gain some highs of around 25 times the valuation at the beginning of the month.
