Will Celsius's collapse lead to more pain for crypto investors?

Crypto investors fear the possible collapse of Celsius may lead to even more pain for a market that was already on shaky ground after the demise of $60 billion stablecoin venture Terra. Celsius was an investor in Terra, but says it had “minimal” exposure to the project. Celsius did not return multiple CNBC requests for comment.

Is Celsius a'mispriced risk'?

"The whole thing is just mispriced risk," Cory Klippsten, CEO of crypto investment platform Swan Bitcoin, said of Celsius' business model. Celsius has hired restructuring lawyers, the Wall Street Journal reported Tuesday. Its problems have sparked fears that other crypto lending platforms may be at risk of investor runs.

Is Celsius a dangerous company?

According to Celsius employees, the crypto company has been walking a dangerous path for years. Former director of financial crimes compliance Timothy Cradle told reporters, “The biggest issue was a failure of risk management.” Cradle added, “They didn’t want to spend on compliance.”

What is Celsius' liquidity issue?

The event caused $40 billion in losses and sparked a deeper crypto winter across the industry, creating a gap between Celsius’ assets and liabilities. Prior to this, Celsius’ liquidity issue was a major risk. The event merely directed light onto an existing shadow.