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 has sparked discussions and prompted the price of the firm’s token to take a 60% tumble in the past hour to as low as 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, growth equity fund WestCap Group 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, which was valued at $3.25 billion when it extended its “oversubscribed” Series B financing round to $750 million in November, 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 a brutal weekend 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 🇺🇸 (@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 to reassure customers in recent weeks, saying that they can withdraw their assets at any time, and questioned skeptics. The firm also launched a recurring promotion recently, offering customers rewards if they transferred assets into Celsius accounts and held positions for up to 180 days.
“The beauty of what Celsius managed to do is that we deliver yield, we pay it to the people who would never be able to do it themselves, we take it from the rich, and we beat the index. That’s like going to the Olympics and getting 15 medals in 15 different fields,” Mashinsky said in a video streamed in December.
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