Another big name in crypto finance is taking drastic steps in the wake of plunging currency values. As The Verge notes, lending heavyweight Celsius Network has ‘paused’ all withdrawals, inter-account transfers and Swaps in response to “extreme market conditions.” The move is meant to stabilize the liquidity of assets and provide a better opportunity to meet withdrawal obligations, according the company.
The firm didn’t say when it would lift the freeze, or what would happen next. It promise to restore usual operations “as quickly as possible,” but cautioned that the effort would “take time” and could include delays.
Celsius has struggled like much of the cryptocurrency market. Its CEL token was worth $7 roughly a year ago, but had tumbled to $3 by early April and is worth just 21 cents as we write this. The company claimed on June 7th that it had the reserves and Ethereum to meet obligations, but CEL’s value was cut by more than half in just the few days after that initial announcement.
Critics have raised concerns about Celsius’ unusually high yields (currently over 18.6 percent for deposits) and its links to the failed stablecoin Terra. Its CFO was arrested in November over fraud, money laundering and sexual assault allegations. Regulators in Alabama, New Jersey, New York and Texas have also scrutinized Celsius’ activities, with New Jersey issuing a cease-and-desist order last September. Simply put, there have long been worries Celsius’ business was unsustainable — the activity pause doesn’t help matters.
Customers, meanwhile, might pay the price. Unlike a conventional bank, Celsius doesn’t have FDIC insurance to protect users. If it fails, the roughly 1.7 million people who use the lender might not have much opportunity to recover their lost finances. While some crypto asset regulation is in development, it might arrive too late for Celsius’ clients.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.