Crypto crash continues as Celsius lender ‘halts’ withdrawals
Cryptocurrency lender Celsius said “extreme market conditions” have forced it to “suspend” all withdrawals as digital currencies crash to prices not seen since last year.
The New Jersey-based company, which operates similar to a bank, suspended all user exchanges in the wee hours of this morning.
In a note to its users, Celsius officials said, “We are taking this necessary step for the benefit of our entire community to stabilize liquidity and operations.”
Celsius also said its 1.7 million users would continue to accrue rewards while their accounts were frozen.
Crypto markets crashed after the announcement, with Bitcoin falling to its lowest level since December 2020 at around $20,300.
Ether, the world’s second largest cryptocurrency, fell more than 8% to $1,303, its lowest since March 2021.
Celsius’ own CEL token fell 73% overnight to $0.19, according to cryptocurrency price data site CoinGecko. Data from April suggested that the token was worth around $3 at that time.
Celsius’ size exposes it to much of the crypto markets, with the lender taking out a $500 million loan from Tether last year. Tether is a so-called stablecoin whose value is pegged to that of a real currency, the dollar. Tether’s value was broadly stable this morning, rising from $0.999 to $0.998.
As of May 17, Celsius had processed $8.2 billion in loans and had $11.8 billion in assets, according to its website. Celsius said in August last year that it had more than $20 billion in assets, Reuters reported.
The lender operates like a traditional bank by accepting deposits from users, paying interest on them, and granting loans in cryptocurrencies.
An announcement on its website this morning promised an 18% return on investment, spread across a variety of token trading instruments.
In May, the Terra cryptocurrency crashed amid what was described as a Black Wednesday for digital token markets.
A stablecoin similar to Tether, the crash of Terra rocked cryptocurrency markets after a previously unnoticed flaw in its model caused the value of a related token to plummet, dragging Terra down with it.