- Celsius states that it’s pausing all withdrawals, Swap, and transfers between accounts owing to “extreme market conditions”.
- The Network’s CEL has plunged about 20% on Friday.
- It also suffered a 50% decline in 2022 in the value of assets deposited on its platform.
Crypto firm Celsius Network has been in the middle of a rough patch for quite some while. The firm was already trying to navigate rumors relating to its decreasing sustainability of high yields offered when its CEL token plunged about 20% on Friday.
The Network has now sparked new raging discussions regarding its liquidity within the crypto community as it states that it’s pausing all withdrawals, Swap, and transfers between accounts owing to “extreme market conditions. The lending platform, in its blog announcement, stated that its taking necessary action for the benefit of its entire community in order to stabilize liquidity and operations while it take steps to preserve and protect assets.
Celsius earlier had asked some borrowers who had posted CEL tokens as collateral for loans for additional funds selling the holdings if the investors failed to come up with additional money in time. Investors are now in a frenzy as CEL keeps plunging and trading becomes illiquid, worsening their losses. The company is also facing allegations for concealing at least 35,000 ETH in the event of the private key loss of Eth2.0 staking solution company Stakehound from its customers for over a year.
Celsius Network further suffered a 50% decline in 2022 in the value of assets deposited on its platform, exacerbating its already weakening position in the crypto ecosystem. According to its website, it had just under $12 billion worth of digital assets as of May 17, compared to $24 billion in late December 2021.
Alex Mashinsky, Founder of Celsius Network, had earlier sought to reassure customers after the collapse of terraUSD hit prices across crypto markets. He had earlier stated the company had “minimal exposure” to TerraUSD and Luna tokens. The company allegedly lost $500M of client deposits in the recent LUNA stablecoin collapse.
To top it all off, Celsius also suffered from significant client outflows in recent months, including $750 Million between May 6 and May 14. Celsius is one of the many crypto businesses that offer customers interest on their digital assets and advertises yields as high as 18.6%. The network has come under serious scrutiny from financial regulators who argue that such products should be registered as securities.
Since Terra’s failure, demand for high-yielding lending protocols has taken a major hit. Celsius, which claims to have 1.7 Million customers, had acknowledged this but said earlier it was able to avert Terra’s crisis early on. Many believe Celsius’s rumored slump towards insolvency reflects falling prices in crypto markets. With prices now in retreat, companies with billions of customer deposits, including Celsius, are working towards overcoming this marketwide crypto slump.
The rival lending platform of Celsius, Nexo, has offered to purchase the former’s remaining quality assets, particularly the collateralized loan assets.