Cryptocurrency lending platform Celsius Network halted withdrawals due to ‘extreme market conditions’ as the market value of digital assets fell below $1tn (£820bn) .
Bitcoin fell to a 17-month low of $23,880 after the Celsius announcement, while Ether, the world’s second-largest cryptocurrency after Bitcoin, fell more than 15% to $1,250, its lowest since January 2021. Meanwhile, Binance, the cryptocurrency exchange, announced on Monday that it had “temporarily suspended” bitcoin withdrawals due to a “blocked on-chain transaction”.
The total value of the cryptocurrency market fell below $1 billion on Monday after the selloff, according to data site CoinMarketCap, which had valued the market at nearly $3 billion in November.
Celsius said in a blog post that it was “suspending” all withdrawals and transfers between accounts for its 1.7 million customers. The company offers its customers high interest rates – up to 18% – on their cryptocurrency deposits and pays interest on crypto assets, which includes its own token, called CEL.
“Due to extreme market conditions, we are announcing today that Celsius is suspending all withdrawals, trades and transfers between accounts,” the platform said. “We are taking this action today to put Celsius in a better position to meet, over time, its withdrawal obligations.”
On June 7, Celsius posted a blog aimed at reassuring clients amid volatility in the cryptocurrency markets, initially triggered by a collapse of the Terra crypto project.
Titled “Damn Torpedoes, Full Speed Ahead,” the blog post said the company had had “no problems responding to takedown requests.” Celsius has offices in London, New York and Lithuania.
Celsius’s website tells customers they can “borrow like a billionaire.” It has $11.8 billion in assets, up from more than $24 billion in December last year. In November, it said it had raised $750 million from investors including the Caisse de depot et placement du Quebec, one of Canada’s largest pension funds.
Like a bank, Celsius also has a retail lending operation, with customers able to borrow money, denominated in US dollars, from the service. However, due to the inability to send debt collectors after a crypto wallet, Celsius loans are “over-collateralized”: customers must deposit bitcoin or ethereum worth at least twice the value of the cryptocurrency. money they borrow. This can be useful if, for example, a bitcoin millionaire needs the money to buy a house but doesn’t want to liquidate their bitcoin holdings because they’re betting the coin will rise again.
However, unlike a bank, Celsius’ loans charge a lower interest rate than it pays on deposits. The company makes up the difference through an opaque investment strategy that has in the past involved investing $300 million in bitcoin mining, offering more traditional loans to unnamed “institutional investors” at interest rates of interest and take large stakes in other cryptocurrency projects.
Sometimes this strategy has led to heavy losses: a hack of the BadgerDAO decentralized investment platform that wiped out this project was found to have cost $50 million Celsius in bitcoins.
The company also had a close relationship with defunct stablecoin project Terra, at one point investing $500 million in funds into the peg protocol, Terra’s own savings and lending service. Celsius also offers customers higher returns if they accept their interest payments in the project’s own crypto token, CEL, which traded at $7 last year and fell to below $0.20.
Cryptocurrencies were also carried away by market panic over rising interest rates, which blunted the appetite for high-risk assets.
We want to say thanks to the author of this post for this amazing web content
Crypto Lender Celsius Halts Withdrawals Due to “Extreme Market Conditions” | Cryptocurrencies – Tech Tribune France
Take a look at our social media profiles and also other pages related to themhttps://metfabtech.com/related-pages/