According to a blog post published on June 12, the cryptocurrency lender has halted client withdrawals, swaps, and transfers owing to “extreme market circumstances.”
The message said that the extraordinary move was taken “to put Celsius in a better position to meet its withdrawal commitments over time.” They added:
Our first aim is to act in the best interest of our community. In service of this pledge and in accordance with our risk management system, we have activated a provision in our Terms of Service that will enable this procedure. Celsius have great assets, and we are carefully trying to fulfil our duties.”
Celsius said that it will seek to maintain liquidity during the suspension in order to protect its assets, adding that it saw this as the “most appropriate step” for serving its clients.
Celsius is a cryptocurrency loan company best recognised for providing double-digit returns on Bitcoin and Ethereum. It is part of a growing set of companies that operate in the so-called “CeFi” market, exploiting the DeFi space while operating as a centralised custodian service for cryptocurrency holders.
In order to provide consumers with higher returns, Celsius invests in DeFi technologies. Recent market volatility has hindered its capacity to provide the once-promised handsome returns, causing significant concern in the cryptocurrency industry that it may suffer bankruptcy difficulties (the rumours intensified this week when Lido-staked ETH lost parity with ETH, raising suspicions that Celsius may have been selling its stETH tokens in a desperate bid to repay customers). In recent weeks, Celsius CEO Alex Mashinsky has denied the bankruptcy accusations on many occasions.
Celsius has taken an unusual move with today’s upgrade, thereby preventing clients from accessing their assets. Such a move is essentially unprecedented for a business of Celsius’s scale, which managed $20 billion in assets last year. Last year, the firm received $750 million in a fundraising round and claims to have more than 1.7 million clients.
Celsius admitted that the news was “tough” and thanked its community for its support before concluding the blog post. “We are pleased to serve you. Our activities continue, and we will continue to provide updates as they become available,” the message said.
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