Crypto platform Celsius pauses withdrawals due to fragile crypto market

Crypto platform Celsius pauses withdrawals due to fragile crypto market

Celsius, a platform that facilitate buy, earn, swap, borrow, and send crypto, has recently announced that it is pausing all withdrawals, creating more pain in the presently fragile crypto market.

Celsius is one of the leading players in the crypto lending space, with nearly $8 billion lent out to its customers and approximately $12 billion in the form of assets under management as of May 2022. This platform is just like a bank in terms of crypto with higher-than-average interest rates on client’s deposit and with no stringent insurance requirements faced by conventional lenders.

The company said that owing to the extreme market conditions, Celsius is pausing all withdrawals, transfers, and swaps between accounts.

The announcement has raised concerns towards solvency of Celsius. The company has witnessed its assets of more than halve since October 2021, when it managed $26 billion in client funds.

Notably, Celsius’ CEL token that encourages people to buy, gain discounts on lending rates, and earn rewards, has also erased 97% of its value in the same timeframe.

With respect to this move, the company said that acting in the interest of Celsius’ community is the top priority. As a result, the company has activated a clause in its Terms of Use that will enable this process to take place.

Celsius has worthy assets and the firm is diligently working to meet its obligations, said the company in a memo.

Recently, the company also cleared that it is not facing any issues in fulfilling the withdrawal requests. Celsius claimed that it had surplus reserves and “more than enough” of the cryptocurrency Ethereum, to meet obligations.

In April, Alex Mashinsky, the cofounder of Celsius, told a credible source that the company averagely holds 300% collateral for each loan it issues to its retail investors, and for institutional investors, the company offers undercollateralized loans.

Source Credit: https://www.cnbc.com/2022/06/13/crypto-lender-celsius-pauses-withdrawals-bitcoin-slides.html