The crypto community is concerned that the transfer could lead to the dumping of more than $500 million Bitcoin into the market.
Embattled lending platform Celsius has transferred nearly 25,000 Wrapped Bitcoin (wBTC), worth $528.9 million to crypto exchange FTX, prompting concerns from some in the community about whether a dump may soon follow.
The huge transfer to the exchange comes after the lending platform paid off its remaining $41.2 million of debt to Maker (MKR) protocol, freeing up its loan’s entire wBTC collateral.
However, the community is unsure what to make of the transfer, with some fearing that a dump of the wBTC on the exchange could soon follow, pushing Bitcoin prices down.
Others have been more hopeful that the move may be in preparation for Celsius to swap their wrapped Bitcoin for BTC, which may be a good sign for depositors who’ve been hoping for Bitcoin withdrawals to eventually reopen on the Celsius platform. Bitcoin is up 8% in the past 24 hours to trade above $22,100, suggesting market participants are taking the news in their stride.
The 21,962 WBTC unlocked from paying off the remaining DAI loan has already found its way to FTX…
that didn’t take long…
Incoming $BTC dump? https://t.co/A9B9YaLQ1W#CelShortSqueeze = #CelPumpAndDump
Not your keys, not your crypto pic.twitter.com/V2edblhmXZ
— Airdawg (@Colwellinvestor) July 7, 2022
The 25,000 wBTC sent to FTX follows the news earlier today that 150,000 BTC may be potentially released into the market as Mt.Gox creditors get their BTC back after an eight-year wait.
So far, both Celsius and CEO Alex Mashinsky have remained radio silent about any movement of funds.
Crypto lawyer Joni Pirovich, Principal of Blockchain & Digital Assets told Cointelegraph on July 7 that Celsius’ repayment of its loan position with Maker will ultimately assist its customers.
Related: Bombshell allegations of fraud as KeyFi takes Celsius to court
“Maker protocol relies on overcollateralized loan positions, so the loan repayment of US$41 million worth of DAI released 21,962 WBTC of capital which is now available to meet customer withdrawal requests.”
Pirovich added that even if Celsius ends up filing for bankruptcy, that repaying the loan position and withdrawing collateral could improve the position of customers.
“The question is what will Celsius do with the withdrawn collateral? Keep it in reserve for customers or risk it to trade and on-lend.”
