What is Happening with Celsius Halting its Withdrawals?
Celsius, a leading crypto lending platform that promises high-yield returns on customer deposits, turns up to be the latest crypto firm to buckle under-tightening financial state. It comes just one month after the crash of the Terra-Luna stablecoin platform. The crypto-lending firm Celsius Network stated on Monday that it is stopping all withdrawals, swaps, and transfers adding more pressure on the crypto industry.
The project announced on its blog that this action was executed to stabilize liquidity and operations while protecting the assets of its community. It was also confirmed that the clients will still accrue rewards during the halt period. Celsius operates like an unregulated bank that entices clients with outstanding rates for depositing their cryptos and then loaning out those deposits to other customers. Since BTC’s price has fallen 40% in the last year, there’s no guarantee it can pay out clients in the event of a rush of withdrawals since most of the loans are also collateralized in Bitcoin.
Following the news, Celsius has unstacked $247 million worth of WBTC from AAVE and sent it to the FTX exchange, raising a red flag in the crypto community. This news has gained mixed reactions from the crypto community as well as a ripple effect in the industry as the price of Bitcoin plunged to pre-pandemic levels.
Can Celsius become the next TerraUSD, a blockchain project whose value is rapidly crashing? This might just be an early stage of another story.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals