On Monday, cryptocurrency firm Celsius known for its lending services said that it will be halting its operations which include withdrawals, swaps, and transfers. The cryptocurrency firm which is existing in the infantile crypto lending space cited extreme market conditions as the reason for its decision. Its decision is another cut in the already bleeding cryptocurrency market.
Over the last weekend, more than $150 billion was wiped off the currency market and the world’s biggest cryptocurrency Bitcoin was trading below $25,000 as of Monday morning.
In a memo Celsius sent to its clients on Monday, the cryptocurrency lender said that “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps, and transfers between accounts.”
Celsius’ new development has raised eyebrows leaving people asking if the company’s decision stemmed from extreme market conditions or an inability to meet its long-term debt and other financial obligations. Celsius’ assets’ value has dropped more than half since last year October when it handled $26 billion in client funds. Its native token Cel has seen about 97 percent of its value wiped and the company is the largest holder of this token…
The company, however, added in its memo that “acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.”
Last week, the company had said that it was not encountering any challenges with withdrawals adding that it had reserves and ample Ether to meet its obligations.
Vijay Ayyar, the Vice President of Corporate Development and International at crypto exchange Luno commented on the Celsius development. “The Celsius situation is definitely adding fuel to the fire. Broadly the markets were already under pressure from inflation concerns and the interest rate hikes, but with crypto, such contagion events could cause outsized declines, given the market is tightly interlinked these days with a variety of inter-connected protocols and businesses,” he said.
The crypto lending space is still much in a nascent stage. Celsius remains one of the biggest players in space. It has lent out over $8 billion to clients and as of May, had about $12 billion in assets under its management.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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