There are concerns that the crypto lender would be unable to keep giving increased yields or make its clients whole due to the recent downturn in the crypto market. Its native token is currently down 54 %.
The news comes after weeks of speculation that the crypto lender might face insolvency due to the market’s decline.
Customers of Celsius are unable to access their funds. Celsius appears to be in a state of emergency.
What did Celsius say?
According to a blog post published on June 12, the crypto lender has halted customer withdrawals, exchanges, and transfers due to “extreme market conditions.”
The firm was taking drastic action, according to the note, “to put Celsius in a better position to honor its withdrawal obligations over time.” It went on to say:
“Our first aim is to act in the best interests of our community. We’ve triggered a section in our Terms of Use that will allow this process to honor that commitment and conform to our risk management strategy. We have substantial assets at Celsius and are working hard to meet our duties.”
Celsius said it would work to keep liquidity stable during the shutdown to protect its assets, calling the action “the most responsible action” to serve its customers.
Celsius is a cryptocurrency loan company best known for providing customers with high double-digit returns on assets such as Bitcoin and Ethereum. It’s one of a growing number of companies that operate in the “CeFi” area, exploiting the DeFi space while serving as a centralized custodian service for cryptocurrency investors.
Celsius invests capital in DeFi technologies to provide clients with higher payouts. However, recent market volatility has harmed its capacity to provide the substantial returns it formerly promised, leading to widespread speculation in the cryptocurrency world that it may be bankrupt. The rumors intensified this week when Lido-staked ETH lost parity with ETH, raising suspicions that Celsius may have been selling its stETH tokens desperately to repay customers. In recent weeks, Celsius CEO Alex Mashinsky has rejected the insolvency accusations on many occasions.
Because Celsius effectively prohibits clients from accessing their assets, today’s update is the first such move for a corporation the size of Celsius, which had $20 billion in assets under management last year. Last year, the company raised $750 million in a fundraising round and claimed to have more than 1.7 million clients.
Celsius admitted that the news was “tough” and thanked its community for their support at the end of the blog post. “It is our pleasure to be of assistance to you. Our operations are continuing, and we will continue to share information with the public as it becomes available,” the note stated.
During extremely low momentum and negative sentiment across the market, Celsius’ native CEL token has taken a beating on the news. It is currently trading at around $ 0.885, down 54 % on the day and over 97.8 % off its all-time high.
Notably, the broader Crypto market has collapsed again, with Ethereum breaching lows of $ 1,180, which was last achieved in Jan 2021. Similarly, Bitcoin is in free fall, touching $ 24,000, through which it broke off in December 2020!
