Major Crypto Lender Celsius Suspends Withdrawals, Bitcoin Drops To 18-Month Low

Topline

Major crypto lending platform Celsius on Monday announced it was suspending all withdrawals due to “extreme market conditions,” triggering a major selloff in the cryptocurrency market with Bitcoin dropping dropping more than 9%.

The booth of the Celsius Network crypto platform at the Paris NFT Day conference in Paris, France.

Key Facts

In a blog post on Monday, Celsius said it was “pausing all withdrawals, [currency] swap, and transfers between accounts,” noting that it was doing so to allow itself to meet all of its withdrawal obligations in the future.

The company said its action will “stabilize liquidity and operations while we take steps to preserve and protect assets,” and added that its customers will continue to accrue rewards during the freeze.

Following the announcement, the value of Celsius’ own token (CEL) slumped by more than 50%, and as of early Monday morning, it was trading below 20 cents—massively down from around $2 in early May and $7 in June last year.

Celsius’ announcement also triggered a selloff in the wider cryptocurrency market with Bitcoin dropping below $25,000, its lowest level since December 2020.

Tangent

The suspension of withdrawals comes just a day after Celsius founder and CEO Alex Mashinsky hit out at critics on Twitter, accusing them of spreading misinformation and FUD—a popular crypto acronym for “Fear, Uncertainty, Doubt.” Responding to a tweet by Mike Dudas, the founder of crypto news outlet The Block, Mashinsky wrote: “Mike do you know even one person who has a problem withdrawing from Celsius?… If you are paid for this then let everyone know you are picking sides.”

Big Number

$982 billion. That is the overall market capitalization of the entire cryptocurrency market as of early Monday morning, according to CoinMarketCap. This is the first time in over a year that number has slipped below $1 trillion.

Key Background

Questions have been raised about crypto platforms like Celsius that promise massive yields to their customers after last month’s high-profile collapse of another high-yielding stable coin, Terra, and its companion token, Luna, last month. According to the Financial Times, Celsius was also impacted by the overall decline in the cryptocurrency market in the last few months with its overall assets dropping from a value of $24 billion in December 2021 to $11.8 billion last month. Celsius runs one of the largest crypto lending operations in the world and it managed to raise $750 million in funding last year from the likes of investment firm WestCap and Canadian pension fund manager Caisse de dépôt et placement du Québec. Celsius has also borrowed $500 million from the U.S. dollar-pegged stable coin Tether, down from an originally planned loan of $1 billion.

Topline

Key Facts

Tangent

Big Number

Key Background

Further Reading