Celsius Network: Celsius Freezes Withdrawals as Crypto Panic Bites | Economy and business


A cryptocurrency event hosted by CoinDesk in Austin, Texas on June 9.Jordan Vonderhaar/Bloomberg (Bloomberg)

The crypto universe is facing its second major crisis in just one month. US-based platform Celsius Network froze all withdrawals, trades and transfers between accounts on Monday due to “extreme market conditions” – a reference to recent steep falls in cryptocurrencies such as bitcoin and Ethereum. Celsius justified the move as a way to “stabilize liquidity and operations” as other cryptocurrencies plummet.

The announcement – ​​which comes just weeks after the Luna crypto crash wiped out the savings of thousands of people – sparked fears among Celsius investors. According to company figures, Celsius has more than 11 billion euros ($11.5 billion) in assets. The network sells tokens and also offers loans with low interest rates and high returns to users who invest their cryptocurrencies in securities. “Transfer your crypto to Celsius and you could earn up to 18.63% APY in minutes,” the website says.

The news was posted on the company’s blog and shared on Twitter, where investors were quick to voice their concerns. One user commented, “I can’t even repay this fucking loan because of the transfer freeze. This is ridiculous,” while another said: “Holding withdrawals is not in the interest of the ‘community’. What went wrong? Be transparent and inform. Many also shared that they also lost money in the Luna crypto crash.

In the blog post, Celsius attempts to strike a reassuring tone. The company insists that customers will continue to receive the promised returns even if they cannot trade with their money at this time. “We are taking this step today to put Celsius in a better position to meet, over time, its withdrawal obligations,” the blog post reads, while adding that “the process will take time, and there may be be late”.

Celsius was founded by Alex Mashinsky and S. Daniel Leon in the summer of 2017. According to the company’s website, the two laid out the business blueprint on a coffee napkin. Two and a half years later, Celsius was available in 100 countries. As of March 2021, it managed more than $10 billion in assets, and by February of the same year it had 200 employees in offices in New Jersey, London, Tel Aviv, Cyprus and Serbia.

“Banks are not your friends, we all know that. That’s why we decided to create a substitute for the banking system,” says Mashinsky, in a promotional video for Celsius. This message – “banks are not your friends” – is one that the entrepreneur has repeatedly used in speeches and interviews. On Monday, Mashinsky shared a link to the blog post announcing the withdrawal freeze, but had no further comment.

Following the freeze announcement, the company’s CEL token – which can be used to pay for other Celsius services – fell by 60%. Indeed, the entire crypto market fell amid concerns over rising inflation in the United States, which could prompt the Federal Reserve to raise interest rates. Since hitting a record high of $69,000 in November, the cryptocurrency has lost two-thirds of its value. Ethereum, the second-largest cryptocurrency by capitalization, fell 17% to $1,215 on Monday, and its value has also fallen by two-thirds over the past six months.

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