On the eve of a large unlock, selling tokens is packaged as financing, and Celestia is questioned for "pumping and dumping."

Author: Xiyou, ChainCatcher

Recently, the highly discussed modular blockchain Celestia has fallen into a trust crisis. "The disclosed $100 million financing is actually an OTC token sale, announced just before a large unlock countdown," this series of confusing actions has pushed the leading modular public chain Celestia into the spotlight.

The community questions Celestia's actions, suspecting possible collusion with VCs or institutions to "pump and dump" the token price, announcing the OTC token sale proceeds as financing news just days before the unlock to create a favorable impression, and using information manipulation to guide retail investors to buy in, thus seeking personal gain.

From the community's perspective, the Celestia Foundation failed to provide necessary transparent disclosure regarding this OTC transaction, instead packaging it as financing news, which misled investors and triggered a trust crisis.

However, as of the time of publication, Celestia has not responded to this controversy.

Countdown to $1 Billion TIA Unlock, Announcement of "$100 Million Financing" May Be Suspected of Pump and Dump

On September 24, the Celestia Foundation publicly announced that it had completed a $100 million financing round, led by Bain Capital Crypto, with participation from Syncracy Capital, 1kx, Robot Ventures, Placeholder, among others, stating that this brings the total amount raised by the project to $155 million.

After this positive news was released, Celestia's native token TIA surged, with the price rising from $5.6 to a high of $6.9 on the same day, an increase of over 20%, and has since fallen back to around $6.5.

However, while the crypto community was celebrating Celestia's massive financing, well-known crypto investor Sisyphus revealed on social media that the $100 million financing announced by Celestia was actually an OTC transaction that the foundation had reached with several institutions months ago, with a financing valuation of $3.5 billion at that time. These token shares may be unlocked in October.

Sisyphus also added that if the institutions could sell all unlocked assets at $7.5, they would break even.

Moreover, Sisyphus's true identity was revealed by users to be Kevin Pawla, the former head of OpenSea Ventures.

After Sisyphus's remarks, the originally positive financing news took a turn. The community believes that Celestia's $100 million financing is actually the proceeds from an OTC token sale from months ago, merely packaged as new financing and disclosed at the time of the unlock.

This series of actions has angered users in the crypto community, who generally believe that the foundation or team should not disclose OTC transaction proceeds as new financing, and especially should not release packaged fundraising positive news just before a large unlock, which raises suspicions of inducing users to buy in and pump the price.

According to Token unlock data, on October 30, Celestia will have over 175 million TIA tokens unlocked, accounting for 17.68% of the total supply, valued at approximately $1.08 billion. This is likely to lead to a significant increase in TIA's market circulation, potentially causing short-term price fluctuations. Historical data shows that large-scale token unlock events often exert downward pressure on prices.

An OTC transaction that was completed months ago waited until a month before the token unlock to release fundraising news, which raises suspicions about the motives behind it, suggesting that the project or institutions may want to take advantage of the situation to pump and dump.

In fact, as early as September 7, Sisyphus had warned on his social media that Celestia had completed a $100 million OTC transaction, with the token price around $3.5. The team and investors would unlock $1 billion in funds over the next six months.

However, Sisyphus's tweet did not attract community attention until Celestia officially announced the financing on September 24, when it was dug up.

Crypto KOL @Ericonomic stated on social media that if Sisyphus's claims are true, the $100 million financing event for Celestia might be another scheme by the project and VC institutions, where the project sold tokens to institutions at a high price months ago and only released the so-called financing news days before the unlock, misleading users into thinking the financing just occurred. These institutions that bought tokens through OTC transactions are currently very optimistic about the project, leading to blind following.

In contrast, community user @minjung has a different view, believing that Celestia's trading in the secondary OTC market is not a bad thing. Direct cooperation with venture capital trading institutions helps mitigate the impact of a large token unlock. Institutions like Syncracy Capital, 1kx, and Robot Ventures are likely hedging. If the proceeds are indeed from the secondary market, it is inappropriate for Celestia to present this transaction as financing, especially before a significant unlock.

The main point of contention in the community regarding Celestia's financing controversy is that the project should clarify the source of the financing funds.

Additionally, OTC transactions are common, and there is no issue with announcing them before the unlock in terms of process. However, the project could have disclosed this funding information in a reasonable and transparent manner, clarifying the project valuation and fund ownership, making it clear that this is proceeds from an OTC transaction rather than financing, and providing relevant information to investors, rather than resorting to concealment and misleading tactics to deceive users.

However, as of September 27, Celestia's official response to the financing controversy has not been forthcoming. ChainCatcher also sought to verify with their official sources regarding the authenticity of the financing disclosure but received no reply.

Celestia's Valuation and Revenue Discrepancy?

Celestia is designed as a modular infrastructure for data availability networks (DA), which can reduce data costs by 99.9% compared to Ethereum's mainnet, the largest DA layer in the industry. The project sparked market frenzy with the TIA token airdrop in February this year, with prices soaring above $21, briefly being hailed as a new blue-chip crypto project. However, as the Layer 2 narrative cooled, the price of TIA began to decline from its peak, dropping to as low as $3.7, a decrease of 80%.

This financing controversy not only triggered a trust crisis for Celestia but also revealed a common issue in crypto projects: the disconnect between valuation and actual revenue.

Despite a valuation of $3.5 billion, Celestia's potential annual revenue is only over $5 million, which is far removed from its actual business situation. This significant gap has led to a reevaluation of the true value of crypto projects.

As early as January this year, reports indicated that Celestia's current data utilization rate is only 0.1%, with total fees being notably low. Celestia generates about 5 TIA or $65 in fees daily. If Celestia's data were fully utilized in the future and TIA's price were calculated at $13, the network could generate about $5.2 million in annual fee revenue, which would be 65 times the data currently published to Ethereum.

Blue Fox also noted at that time that although Celestia's revenue is only in the hundreds of dollars, its diluted market cap is very high, comparable to more mature ecosystems with annual revenues in the tens of millions of dollars. The diluted market cap of TIA is currently around $19 billion, similar to that of Arbitrum, exceeding that of Optimism.

Recent data released by Blockwork on August 6 showed that Celestia's DA data space consumption reached a historical high that week, with a network utilization rate of 1.5%, accounting for 36% of the DA market share, while Ethereum remains the main player in the DA market.

A company valued at several billion dollars with an annual revenue of only over $5 million illustrates the significant gap between valuation and actual value.

Sisyphus also mentioned in a tweet on September 7 that if one buys a product with a valuation of $3.5 billion that only has an annual revenue of $5 million, it is not a good deal.

Regarding the project's high valuation, crypto investor Kiki stated that currently, crypto project valuations overly rely on future imaginative potential while neglecting the current operational situation. Although Celestia has proposed a promising data availability network concept, its technical implementation and commercialization still need further validation.

The main reason for this phenomenon is the lack of a mature valuation system in the crypto industry, with no established valuation processes, standards, or logic. Compared to traditional industries, crypto project valuations are more reliant on conceptual imagination, market speculation, and investor sentiment, lacking in-depth analysis of fundamental indicators such as operational data and profitability.