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Crypto Firm Celsius Pauses all Withdrawals, Swap, and Transfers Between Accounts.

Crypto Firm Celsius pauses all withdrawals, Swap, and transfers between accounts.

The crypto space has been going through a bearish phase since the Terra LUNA crash took place last month. With so many assets being sold off and the Bitcoin price crashing to INR 18 lakhs as of June 14, 2022, the market has taken a turn and many investors have been panic selling ever since. 

Following the market crash, one of the largest crypto lending platforms in the world, Celsius Networks LLC dropped another huge news for all the crypto investors. The New Jersey based crypto lending company announced that it was pausing all withdrawals, swaps, and transfers between accounts, “due to extreme market conditions.” As the announcement hit the crypto space, Bitcoin saw a further 14% decrease in value since last Sunday. 

Also Read: What are DeFi Loans?

What happened to Celsius?

Celsius is one of the biggest crypto lending platforms in the world which claimed to hold assets worth $20 billion according to PRNewswire. The memo addressing the Celsius community stated, ‘ We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.

Valued at $3.25 billion after extending its “oversubscribed” Series B financing round to $750 million in November, Celsius allows its users to deposit their tokens; Bitcoin, Ethereum and Tether; and receive weekly interest payments. Celsius has also offered to pay interest which can go as high as 18% a year to customers who will transfer their tokens to the platform, according to Reuters. 

What is Celsius?

Founded in 2017, Celsius is one of the biggest crypto lending platforms in the world. The Celsius Networks LLC caters to the vision of financial freedom. Their platform had been working toward providing investors with fair yield, zero fees, and lightning-quick transactions via crypto. 

To put it simply, Celsius Network is a democratized interest income and lending platform built on the belief that financial services should work towards solutions that are in the best interests of the community. Within the Celsius platform, crypto holders can earn interest by transferring their coins to their Celsius Wallet and borrowing USD against their crypto collateral at interest rates as low as 4.95% APR, as mentioned in the Celsius blog.

What is Lending in Crypto?

One of the most commonly tried and tested ways to earn crypto is by Crypto lending. The process of crypto lending always involves a lender, a borrower, and a crypto trading platform. This type of Decentralized Finance or DeFi allows investors to lend their cryptos to various borrowers. The lender in return earns some interest which is also known as ‘Crypto Dividends’.

Additional Read: What is Crypto Lending? How does it Work?

Challenges faced by crypto lenders following the collapse of Terraform Labs’ Luna and its sister token UST last month

The Crypto space has seen a steady bearish trend since the Terra LUNA crash took place. As soon as the algorithmic stablecoin lost its value from $1, the sister coin UST also saw a steady fall in its value. Due to the increase in the supply of these two tokens, other LUNA and UST investors started to panic sell the tokens. Coupling with the FOMO this incident created within the crypto ecosystem, investors started seeing a drop in Bitcoin’s value following the rising interest rates and surging inflation as shown in the data presented by the Federal Reserve. 

The data also show that this increase in the prices has not been seen ever since 1981. This resulted in a change in the investor’s strategies, where the rise in rates prompted them in selling some of the more volatile assets from their portfolio. 

Soon after the LUNA and UST crash, like many other big crypto assets like Bitcoin and other stablecoins Tether (USDT) also saw a drop in value. This resulted in it losing the 1:1 peg with the dollar. Though the Tether blockchain has better use cases that show investors and analysts rooting for it to get back to $1

Conclusion

Crypto Lending has seen a rise in popularity in recent times. The rising demand for the same has led many companies to work towards providing the solution to its users. Though the lending option of Celsius has earned them a lot of scrutiny from the investors; especially after the crypto crash, but according to TechCrunch, Alex Mashinsky, chief executive of Celsius Network, has been trying to reassure customers in recent weeks, saying that they can withdraw their assets at any time, and questioned skeptics.

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