The cryptocurrency lender Celsius halted customer swaps and withdrawals on Sunday night due to liquidity issues. CEL token responded with a massive price crash.
Crypto lender Celsius declared a sudden pause of customer swaps, transfers, and withdrawals (on Sunday night) when the crypto market endured freefalls. The company posted on Medium about taking action to improve Celsius withdrawals.
It revealed taking the move to benefit its community by stabilizing operations and liquidity while targeting preserved and safeguarded assets. Moreover, users can continue accruing rewards during the halt.
The company’s native token, CEL, responded within no time, losing approximately 70% within an hour. The coin declined from Sunday’s $0.49 high to $0.15 (Coinmarketcap data). Cryptocurrency enthusiasts (on Twitter) compared that to the Terra crash and the infamous Bitconnect Ponzi scheme.
Meanwhile, the broad market struggled with bearish tendencies when Celsius announced the news on Sunday, though nothing matched CEL’s dramatic crash. Large-cap cryptos traded with substantial losses overnight. Bitcoin lost 9%, Ethereum more than 10%, BNB 9% down, Cardano 11% drop, Solana -12%, and Dogecoin -9%.
Celsius arrived in the markets in 2017 and provides users attractive yields for cryptocurrency deposits, lending it to different crypto firms. It boasts a similar business model to players such as Nexo and BlockFi.
However, most regulators confirmed viewing the high-yield lending products as unregulated securities offerings. Four states, Kentucky, Alabama, Texas, and New Jersey, sent Celsius-cease letters by September 2021. The month had Coinbase shuttering its planned lend product following sue threats from SEC upon any launch.
In February 2022, BlockFi spent $100 million to clear with the US SEC plus 32 states and accepted to adhere to regulations in registering its products to achieve SEC approval. Nexo and Celsius, its peers, are yet to reveal similar plans.
Zac Prince, the BlockFi CEO, responded to Celsius news late on Sunday, tweeting that BlockFi services operated normally. Celsius executive Alex Mashinsky remained silent on Sunday night, only tweeting the company’s blog post.
What are your views about Celsius events amid bearish markets? Will CEL recover? You can leave replies in the comment section below.