Bankrupt Crypto Lender Celsius Stakes $75M ETH via Figment: Motives and Implications

Bankruptcy-recovering crypto lender stakes ETH, nighttime city skyline, silhouettes of finance professionals, golden Art Deco aesthetic, soft moonlight, mysterious atmosphere, digital currency symbols floating.

The once-bankrupt crypto lenderCelsius Network has recently staked nearly $75 million worth of ETH through the staking service Figment. On-chain data has disclosed that the substantial transaction took place between May 10 and 12 via fourteen separate transfers, totaling around 40,928 ETH or approximately $74.5 million by Tuesday’s exchange rate. The funds were directed to a smart contract named “Figment: Eth2 Depositor 1” on the blockchain explorer Etherscan before being moved onto Ethereum’s Beacon Deposit Contract. This staking endeavor, which is one of the largest since Celsius filed for Chapter 11 bankruptcy in July last year, brings several questions to mind.

While there has been no commentary from Celsius or any parties involved regarding the reasoning behind the transfer, one theory suggests that Celsius aims to generate yields on some of its assets during the ongoing bankruptcy proceedings. Currently, the company has already staked more than 158,000 ETH, valued at nearly $287 million, within its staking pool on Ethereum, as per data from 21Shares and Dune Analytics. This data raises a significant question: why did Celsius opt to transfer such a substantial amount of ETH to Figment instead of using its own pool?

The growing popularity of staking is evident with an average annual yield of 5.6% via Figment and nearly 9% for those who stake independently on the Ethereum network, according to The act of staking has become increasingly prevalent, but the choice of transferring ETH to Figment rather than staking it within the Celsius-owned pool remains a point of intrigue.

The collapse of Celsius Network in the summer of 2022 came as a result of plummeting prices for most major cryptocurrencies in the market. The company’s inability to withdraw the staked and locked ETH through staking providers, such as Lido Finance, played a significant part in its downfall, as depositors rushed to withdraw their resources from Celsius.

With no clear explanation or statement thus far regarding Celsius’ decision to stake such a substantial amount of ETH through Figment, the crypto community is left to ponder the reasons behind this move and its implications. Whatever the rationale, this development serves as a reminder of the delicate balance between risk and reward in the ever-evolving world of cryptocurrencies and blockchain technology.

Source: Cryptonews

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