Piaras Ó Mídheach Sportsfile for Web Summit | Getty Images Celsius, a controversial cryptocurrency lending platform, said Monday it was halting all withdrawals, causing more pain in the fragile cryptocurrency market. Celsius is one of the largest players in the emerging cryptocurrency lending space, with more than $ 8 billion lent to customers and nearly $ 12 billion in assets managed since May. The group offers users higher than the average interest rate on their deposits. “Due to extreme market conditions, today we announce that Celsius is suspending all withdrawals, exchanges and transfers between accounts,” the company said in a note to customers on Monday. The move has raised concerns about Celsius solvency. The company has seen the value of its assets fall by more than half since October, when it managed $ 26 billion in customer capital. The Celsius distinctive cel has also erased 97% of its value in the same time frame. Celsius is the largest holder of cel. “Acting in the interest of our community is our top priority,” Celsius said in the note. “In the service of this commitment and in order to comply with our risk management framework, we have activated a clause in the Terms of Use that will allow this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.” Celsius was not immediately available for further comment on the situation when he contacted CNBC. Bitcoin and other cryptocurrencies have hit the news. The largest digital asset in the world fell 8% to $ 25,287, according to data from Coin Metrics, falling to levels not seen since December 2020. Ether fell 8% to $ 1,329, while the distinctive Celsius fell drop over 50%. It comes hot after the collapse of the $ 60 billion stablecoin terraUSD advertiser. The collapse has raised regulators’ fears about cryptocurrencies offering investors unusually high returns. Anchor, a lending service, once promised users interest rates of up to 20% on their terraUSD offerings, a currency that always had to be worth $ 1. Market participants claimed that Celsius had an exposure to the now damaged terraUSD stablecoin. Celsius denied this. Just last week, the company said it had no problem meeting the withdrawal requests. Celsius said it had stocks and “more than enough” of ether cryptocurrencies to meet its obligations. In April, Celsius boss Alex Mashinsky told CNBC that his company holds an average of 300% collateral for every loan it offers to private investors, while issuing subprime loans to institutional investors. “We have been doing this for five years, more than anyone else,” he said at the time. “The business is doing very well.” Hours before announcing the freeze on withdrawals, Mashinsky attacked a cryptocurrency investor who expressed concern with Celsius. “Do you know even one person who has trouble retiring from Celsius?” Mashinsky asked, before accusing the investor of spreading “misinformation”. Encryption lending is still largely a regulatory gray area. US market regulators believe that many of the products should be treated as securities subject to strict rules to ensure investor protection. In February, Celsius’s rival BlockFi was fined $ 100 million by the Hellenic Capital Market Commission and 32 states, which accused it of violating securities laws. Celsius himself sent resignation and resignation letters from four US states. Vijay Ayyar, head of Luno’s international cryptocurrency division, said Celsius’ decision to halt the withdrawals had exacerbated sell-offs in cryptocurrencies, which have already come under pressure amid rising inflation and higher interest rates. “The Luna / Terra disaster probably has a lot of hidden skeletons in the closet, which we now see coming out,” Ayyar told CNBC. “Confidence in these performance products is definitely affected and we will probably see broad regulation for such products in the near future.” Nexo, another cryptocurrency lending company, said it sent a letter to Celsius on Sunday offering to acquire its collateralized loan portfolio, but the company declined. “In a show of goodwill and in an effort to support the digital asset ecosystem in these difficult times, we approached the Celsius team yesterday to offer our support, but our help was turned down,” Antoni Trenchev, CEO, told CNBC. of Nexo. “We firmly believe that much can be done to help Celsius customers in a variety of ways.”
