Celsius, a popular cryptocurrency lender, announced on Monday that it has indefinitely paused most transactions on its platform.
“Due to extreme market conditions, today we are announcing that Celsius is halting all withdrawals, swaps and transfers between accounts,” it added. Told,
“We are taking this action today to better position Celsius to honor its return obligations, over time.”
The move comes after weeks of turmoil and turmoil in the crypto market since early May.
The price of bitcoin has almost halved since May 1, while ethereum has lost more than 50% of its value in the past six weeks.
Celsius’ own crypto token, CEL, is trading at just 20 cents per coin after tanking from $3 in April, according to CoinMarketCap,
Any cryptocurrency investor should know that this is not a guaranteed way to make money.
Their prices are highly volatile and can create large swings without notice, meaning you could lose all the cash you put in.
That’s why it’s important not to invest more than you can afford or invest in anything you don’t understand.
There is also little regulation for cryptocurrency firms, which means you are without protection if things go wrong.
What is Celsius?
Celsius is a lending platform that allows cryptocurrency owners to take out loans against their coins or deposit coins and earn interest while the platform lends their coins elsewhere.
It acts like a bank, but with crypto instead of cash and no brick-and-mortar store or FDIC support on your investments.
The company states that users can earn up to 17% APY by depositing 43 forms of crypto, and Celsius sends weekly payments.
Loans start at less than 1% interest rates, and there are no fees on the platform.
Over 1 million crypto traders use Celsius, making it one of the most popular cryptocurrency lending sites.
In August 2021, the stage announced It amassed over $20 billion in crypto assets after holding just $1 billion a year ago.
Celsius and other crypto lenders like it have run into trouble with regulators in the past.
In addition to the risks associated with the volatility of crypto trading, using a platform like Celsius means that crypto owners must relinquish control of their coins on the platform.
“There is a popular saying among cryptocurrency veterans: not your keys, not your coins,” Frank KorvaSenior analyst for crypto and blockchain at Finder told The Sun.
“Relinquishing control of your private key in an attempt to obtain a yield on your crypto assets adds another layer of risk to the investment.”
Celsius stops the extraction
The cryptocurrency market posted a significant drop this weekend after stumbling in May and early June.
From Sunday, June 12 to the morning of June 13, nearly $1 billion was liquidated, according to guard master,
That slowdown contributed at least partly to Celsius’ decision to suspend withdrawals, swaps and transfers.
“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations, while we are taking steps to preserve and protect assets,” the company said. Told,
financial Times reported that Celsius’ assets declined from $24 billion in March to nearly $12 million last month before this week’s recession.
However, several other factors may have contributed to the decision by Alex Machinsky, the CEO of Celsius.
“There has been a lot of speculation about what is happening behind the scenes at Celcius, but it is difficult to be sure what prompted the company to stop withdrawals and transfers for customers on the platform,” said Mr. Korva. he said.
“It seems likely that if Celsius survives whatever setbacks it is currently facing, McKinsky and his team will be bound in legal battles with both regulators and customers for years to come.”
When Celsius announces transaction stop TwitterMany users took to the answers to express their dissatisfaction.
“It’s ridiculous. Done with Celsius. Let me withdraw and disappear,” one user wrote,
Others criticized Celsius for advertising that users would have access to their crypto “whenever”, and some accused the platform of attempting to “whenever”.pull the rug“To capitalize on and hurt investors.
“Trust in Celsius has been lost, which is a very difficult situation to recover in the crypto space,” said Mr. Korva.
In cases when platforms like Celsius freeze transactions, unfortunately, users have little or no recourse.
Anyone holding money in Celsius can see the value of their account fluctuate until the platform stops.
“When you place your digital assets in the custody of a third-party centralized finance (CEFI) lending service such as Celsius, you temporarily forfeit your rights to access those assets,” Mr. Korva said.
“If a CEFI company like Celsius goes bankrupt, and is forced to liquidate all assets in its custody, this temporary forfeiture may become permanent.”
Celsius has not yet provided a timeline for when users will be able to transfer and withdraw funds, but the platform will “continue to share information with the community when it becomes available”.
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