Celsius Suspends ALL Withdrawals and Blames 'Extreme Market Conditions' — CEL Token Down 50%
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Celsius Suspends ALL Withdrawals and Blames 'Extreme Market Conditions' — CEL Token Down 50%

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5 months ago

Inevitably, parallels are now being drawn with the sudden and dramatic collapse of Terra — with LUNA and UST racking up double-digit losses in a matter of hours as they began a death spiral.

Celsius Suspends ALL Withdrawals and Blames 'Extreme Market Conditions' — CEL Token Down 50%

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Celsius has suspended withdrawals, swaps and transfers in a shock announcement.

The crypto lender has blamed "extreme market conditions" for the drastic move — and claimed this will better ensure that the network can honor its withdrawal obligations over time.

Executives went on to claim that they are determined to act in the best interests of the "entire community" — and insisted customers "will continue to accrue rewards during the pause."

Celsius also stressed that its ability to pause these transactions is outlined in the platform's Terms of Use.

But this has done little to calm investors, with the value of Celsius tokens plunging by more than 50% over the past 24 hours. CoinMarketCap data shows CEL was trading at $0.1925 as of Monday morning — a fall of 75% compared with seven days ago.

Inevitably, parallels are now being drawn with the sudden and dramatic collapse of Terra — with LUNA and UST racking up double-digit losses in a matter of hours as they began a death spiral.

According to the embattled platform's own website, "1.7 million people call Celsius their home for crypto" — a stark indication of the impact the current suspension could have.

Only on Sunday, Celsius CEO Alex Mashinsky was denying reports that users were having issues withdrawing their funds from Celsius — and attacked "FUD and misinformation" on Crypto Twitter.

There have been some in the crypto space who have been openly critical of Celsius for some time. One of them, Mike Alfred, wrote last month:

"The next Terra Luna blow-up is almost certainly Celsius. Celsius may be the most irresponsible company in crypto."

Celsius Network is a big player in the crypto world, and managed to raise $750 million during an oversubscribed funding round last November. The company claimed it commanded a valuation of $3.5 billion at the time, a figure that's guaranteed to have fallen since.

Too Good to Be True?

Celsius Network allows crypto investors to save their crypto and claims to offer annual percentage yields as high as 18.63% — with interest paid weekly. These deposits are then lent out to others. Critics are now questioning whether such returns are simply too good to be true at a time when conventional interest rates remain as low as they are.

Back in April, the platform confirmed that non-accredited U.S. investors — that is, anyone who doesn't have a minimum annual income of $200,000 or a net worth above $1 million — would be banned from earning crypto rewards, with scrutiny from regulators continuing to grow.

And of course, the Celsius Network's suspension comes as major cryptocurrencies including Bitcoin and Ether suffer sharp selloffs.

Bitcoin fell to lows of $25,000 on Monday morning — down more than 8% in a 24-hour timeframe. This is the lowest price we've seen since December 2020.

Ether is performing far worse, and has fallen by 9% today, with the world's second-largest cryptocurrency nursing losses of 30% on a weekly timeframe.

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