Key Takeaways
- Crypto lending company CoinLoan has announced it will be decreasing its daily withdrawal limit from $500,000 to $5,000.
- The Estonian-based platform blamed the panic caused by its competitors’ liquidity issues for a “spike” in customer withdrawals. It claimed current levels of liquidity were sufficient to meet customer needs.
- CoinLoan joins a long list of CeFi companies struggling in the wake of the brutal market downturn.
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CoinLoan just set a new daily withdrawal limit of $5,000 for its customers, a 99% decrease from its previous limit. The company claimed it was “unaffected” by the recent market turmoil but was implementing the change due to a spike in fund withdrawals.
Halting All Withdrawals Would Have Been “More Convenient”
CoinLoan is dropping its withdrawal limit by a factor of 100.
The crypto lending and trading platform announced today that it was introducing a new daily withdrawal limit of $5,000 per user, whereas the previous limit had been set at $500,000 a day. CoinLoan said the measures would be temporary, but effective immediately.
While CoinLoan boasted of being “probably the only company unaffected” by recent stablecoin collapses, hedge fund wipeouts, or liquidity issues on major protocols, it claimed the “turmoil” caused by crypto companies that were impacted has now led to a “spike in withdrawals of assets from CoinLoan.”
The new withdrawal limit was called a “precaution” by the company to ensure a balanced flow of funds and avoid “liquidity-related interruptions.” It claimed the current level of liquidity was sufficient to meet all customer needs, though it acknowledged that halting all withdrawals would have been “more convenient” from a business perspective.
Founded in 2017, CoinLoan is one of the oldest “CeFi” platforms in the crypto space. CeFi is a term used to describe centralized companies that leverage decentralized finance (DeFi) protocols for high yield. The company currently offers a 12.3% APY on stablecoins and fiat currencies (British Pound, Euro) and as high as 7.2% on Bitcoin and a dozen other major cryptocurrencies.
CoinLoan joins a growing list of major CeFi players, such as Celsius, BlockFi, and Vauld, that are struggling with liquidity issues following the prolonged downturn in the crypto market and the collapse of multi-billion dollar crypto hedge fund Three Arrows Capital. Another crypto exchange, Voyager, also paused withdrawals from its platform even after securing a $600 million loan from leading crypto trading firm Alameda Research.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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Source: https://cryptobriefing.com/coinloan-decreases-its-withdrawal-limit-by-x100/?utm_source=feed&utm_medium=rss