Crypto lender Celsius pauses withdrawals and transfers citing "extreme market conditions"
One of the biggest crypto lenders is "pausing withdrawals, swap, and transfers between accounts in a move that has sparked discussions and prompted the price of the firm’s token to take a 60% tumble in the past one hour to as low as 19 cents."
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People have been sounding the alarm for a while about Celsius and many of them were torn to shreds for daring to point out the following things:
🚩For the past couple of weeks celsius implemented measures that made for delayed withdrawals. Many pointed out that something felt fraudulent when depositing was easy and instant, but withdrawal was increasingly difficult. Classic sign of insolvency.
🚩Beyond that, the loans Celsius received from Tether (out of the Cayman Islands) again pointed to insolvency.
🚩The CEO and his wife have been dumping CEL tokens for the last year.
Anyway, these are some major red flags. And yet, because of crypto’s cult-like vibe, people who tried to speak out about these things were absolutely ripped apart and called fear mongers for sharing their opinions. Watching this all unfold is so wild.
A crypto lender is a company that allows borrowers to use their cryptocurrency holdings as collateral to borrow money or stablecoins. Crypto lending has become a popular option for individuals and businesses in the cryptocurrency industry who need access to liquidity without having to sell their digital assets(https://market.cryptex.net/coin/en/usd/bitcoin)
Crypto lenders typically offer a variety of loan options, including term loans, lines of credit, and overcollateralized loans. These loans can be used for a variety of purposes, such as funding new projects, paying off debts, or taking advantage of investment opportunities.
One of the key advantages of crypto lending is that it allows borrowers to maintain ownership of their digital assets while accessing liquidity. This can be particularly useful in a volatile market, as borrowers can retain the potential upside of their assets while accessing funds to cover their expenses.
Celsius is one of the leading crypto lending platforms, offering loans and interest-earning accounts to its users. The platform allows users to earn interest on their cryptocurrency holdings or borrow money using their digital assets as collateral. Celsius has gained popularity in the crypto community for its competitive interest rates and user-friendly interface.
Recently, Celsius announced that it was temporarily pausing all withdrawals and deposits due to an issue with one of its service providers. The company assured users that their funds were safe and that it was working to resolve the issue as quickly as possible.
Woah. First Terra/UST and now this.
The stablecoin market is not so...stable.
This is probably going to cause a lot of people to lose faith in using crypto as a stable/long-term solution and switch to good ol' index funds. I, for sure, plan to invest more of my % into index funds vs. crypto right now.
Not sure there are many people who have/had "faith in using crypto as a stable/long-term solution"...
I wish I could agree, but I think a lot of people do think it's a good long-term solution.
This really isn't a blow to the stablecoin market like Terra/UST. Celcius mainly let users deposit bitcoin and would lend it out for yield. No stablecoins to my knowledge were impacted.
To me, this actually further reinforces the need for crypto. This is a custodial service that is controlled by one entity that can just freeze customers' accounts. That sorta thing isn't possible with DeFi.
The problem is that people think their crypto can't be frozen or messed with... but it can. And it requires some decent tech chops to set it up in a way that is safe.
Wow I love IH. A rare sensible conversation in this thread about crypto without mania.
Hah, I know - isn't IH great?
FYI, most CEX including Binance added bunch of new wording in all their T&C in the past 2-3 weeks from the Terra/crypto meltdown
Not surprised!
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As it turned out, even centralized platforms can fool you, everyone is welcome as they say
Celsius has hired restructuring attorneys from law firm Akin Gump Strauss Hauer & Feld LLP now to find possible financing options from investors and explore other strategic alternatives, including a financial restructuring.
Interesting, thanks for sharing!
Just watched coffeezilla's video on this. Crypto is wild!
Yeah, it really is!
Historically I would categorize this a signals of "maximum pain" but that is IF Celsius does not go insolvent.
They are a huge player and having anything go wrong with them would bring everything to a new low.
For now I am hoping this is just precautionary as they move funds around.
The hardest part for me as a builder of a crypto product is to try to build interest in the red times. I appreciate any reads and shares of this:
https://asset.gift/blog/posts/62a72c2cc0ea530657b70bdc
We'll see...
Oofta, it's one thing after another in crypto right now!
Can they do that? That seems kinda messed up to me.
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