fbpx

Popular DeFi Crypto Celsius Network (CEL) Halts Withdrawals, Crashes 50%, BTC Falls Below $25K

Popular DeFi Crypto Celsius Network (CEL) Halts Withdrawals, Crashes 50%, BTC Falls Below $25K

Celsius Network

Image: Bitcoin in flames by Jernej Furman, https://www.flickr.com/photos/91261194@N06/ https://creativecommons.org/licenses/by/2.0/

Citing “extreme market conditions,” cryptocurrency lender Celsius Network announced on June 12 that it was freezing withdrawals and transfers, a move that resulted in sending its price down almost 70 percent and triggering a slide among other crypto coins.

Turbulence in the financial markets is causing distress in the cryptosphere as rising interest rates and inflation hurt riskier assets.

Celsius (CEL), which was trading at a high of $0.48 within the last 24 hours, fell to $0.15 and was trading at $0.21 as of this writing.

Bitcoin, the No. 1 cryptocurrency, fell to an 18-month low price and was trading at $23,704.62 as of this writing following the Celsius move.

Stakeholders were shocked in May when the stablecoin TerraUSD lost its dollar peg and, along with sister token Luna, collapsed to the tune of $60 billion, raising questions about the future survival of crypto assets.

Celsius offers customers who deposit cryptocurrencies on its platform a chance to earn interest rates as high as 18.6 percent by lending out crypto. The company website encourages customers to “Earn high. Borrow low.”

“Celsius has valuable assets and we are working diligently to meet our obligations,” the company said in a June 12 blog.

Just a day before he sent out the June 12 blog, the founder and CEO of Celsius Network challenged criticism that Celsius customers were having problems making withdrawals and he called for solidarity against traditional finance.


Are you interested in getting smart on Life Insurance?
Click here to take the next step

“I hope retail can get out. I’ve been hearing about accounts locked. That would be similar to LUNA,” tweeted Mike Dudas, founder of 6th Man Ventures venture capital fund, in a June 11 blog.

“Mike do you know even one person who has a problem withdrawing from Celsius?” Celsius founder Alex Mashinsky replied on Twitter, adding, “why spread FUD and misinformation. If you are paid for this then let everyone know you are picking sides otherwise our job is to fight Tradfi together…”

The combined value of cryptocurrencies dropped below $1 trillion on June 13 for the first time since January 2021, dragged down by an 11 percent drop in the price of Bitcoin, Reuters reported.

Celsius and other crypto firms that offer bank-like services are in a “grey area” of regulations, “not subject to any clear regulation that requires disclosure” of their assets, said Matthew Nyman at CMS law firm.

However, Celsius claims to “bring the transparency of decentralized finance to a centralized company”. It claims to be a regulated, SEC-compliant lending platform that enables users to receive interest on deposited cryptocurrencies or take out crypto collateralized loans.

In 2018, Celsius launched an initial coin offering, raising about $50 million by selling 325 million CEL (about half its total supply).

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?

Celsius CEO Mashinsky said in October 2021 that the company had more than $25 billion in assets.

Celsius raised $750 million in funding in November 2021, valuing the company at $3.25 billion. Investors included Canada’s No. 2 pension fund, Caisse de Dépôt et Placement du Québec.

As of May 17, 2022, Celsius had $11.8 billion in assets, down by more than 50 percent, and had processed a total of $8.2 billion worth of loans, Reuters reported.

“How many weeks of runway do you have to support withdrawals”? Dudas asked in a June 11 tweet.

“None.” said James Bachini, a blogger who manages “a substantial portfolio of crypto assets,” by way of response.

Image: Bitcoin in flames by Jernej Furman, https://www.flickr.com/photos/91261194@N06/
https://creativecommons.org/licenses/by/2.0/