Crypto Lender Celsius Pauses All Withdrawals Due To ‘Economic Conditions’

June 14, 2022 10:33 pm Comments

Celsius is known as one of the biggest crypto lending platforms in the industry as it has lent out more than $8 billion to all of its clients and manages assets that total around $12 billion.

The platform can be considered the crypto version of a traditional bank where it pays out interest to its depositors and charges interest for the loans that it gives out.

It is attractive for some due to the fact that it doesn’t have all the strict requirements that a regular bank would need when operating as a lender.

However, it seems that the platform has now made a surprising move and has decided to pause all withdrawals from the platform which has concerned all the platform’s account holders.

CNBC reports:

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company said in a memo to clients on Monday.

The move has raised concerns about Celsius’ solvency. The firm has seen the value of its assets more than halve since October, when it handled $26 billion in client funds. Celsius’ cel token has also erased 97% of its value in the same timeframe.

Celsius is the biggest holder of cel, a token it encourages people to buy to earn rewards and get discounts on lending rates.

“Acting in the interest of our community is our top priority,” Celsius said in the memo. “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.”

The length of time that this pause in withdrawals will last is still currently unknown at this time, but it has already sparked outrage from the crypto community.

Some are speculating that Celsius might have had investment exposure to the collapsed UST stable coin, but the company is currently denying this.

Instead, it is saying that it that it had more than enough reserves to meet all the withdrawal requests, but this pause has already damaged the crypto market even further and sparked concerns.

Crypto lending may continue to be an industry that continues to grow in the future, but will likely attract a lot of law maker and regulatory scrutiny.

CoinDesk reports:

The announcement comes on top of Celsius telling nonaccredited investors that they could no longer transfer funds.

The company also recently replaced its chief financial officer, after former Chief Financial Officer Yaron Shalem was arrested by Israeli police in 2021.

The price of Celsius’s CEL token fell over 50% after the news came out.

The company has also faced regulatory issues, with law enforcement entities issuing cease-and-desist orders against it.

Crypto reporter Colin Wu, who goes by @WuBlockchain on Twitter, posted Monday that Celsius has transferred about 104,000 ETH to FTX in the past three days.

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