Celsius Network, one of the biggest crypto lenders, told customers Sunday evening that it is pausing “withdrawals, swap, and transfers between accounts” in a move that is sparking discussions and has prompted the price of the firm’s token to take a 60% tumble in the past one hour to 19 cents.
“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” wrote Celsius, which counts stablecoin-issuer Tether International and Canadian pension fund Caisse de Dépôt et Placement du Québec among its investors.
“Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.”
Celsius, valued at about $3 billion, allows users to deposit their Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and the token, the platform offers as much as 18% interest a year. On its website, Celsius says 1.7 million people call “Celsius their home for crypto.”
The announcement follows one of the brutal weekends in the cryptocurrency market that saw hundreds of millions of dollars worth of liquidation. At the time of publication, Bitcoin was trading at about $25,585 and Ethereum at $1,346, some of their lowest levels in over a year. Other high-profile crypto projects including Solana, BNB and FTT were also down.
There must be many users who are in a position of leverage and desperately need those funds from Celsius, now locked away. I’m sad we’ve gotten here. Protect yourselves.
— Ledger
Prometheus of the Plebs (@ledgerstatus) June 13, 2022
Crypto lenders are facing increased scrutiny following the collapse of Terraform Labs’ Luna and its sister token UST last month. Alex Mashinsky, chief executive of Celsius Network, has been trying reassure customers in recent weeks, saying that they can withdraw their assets at any time and questioned skeptics. But on its website, Celsius says it has about $3.8 billion of assets, down from $24 billion it disclosed in late December 2021.
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via Technews
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