Celsius Network Ltd., which for years presented itself as the “world’s leading cryptocurrency lending and profit platform,” is freezing all withdrawals and transfers among its 1.7 million customers as tokens like bitcoin continue falling and investors rush out of the digital asset. market.
Citing “extreme market conditions,” the New Jersey-based company said in a blog post that a risk management clause on withdrawal obligations in its terms of use agreement has been activated indefinitely. This means that customers cannot withdraw their money from Celsius, as unregulated cryptographic exchange has decided to stop all transactions. In May, the company had more than $ 11 billion in assets.
“There is a lot of work ahead, as we consider several options, this process will take time and there may be delays,” Celsius said on Sunday afternoon. “Our ultimate goal is to stabilize liquidity and restore withdrawals, exchanges and transfers between accounts as soon as possible.”
Major cryptocurrencies fell on Monday after the announcement of Celsius. Bitcoin touched an 18-month low of $ 30,349. Ether fell as much as 16 percent to $ 1,585, its lowest price in two years.
While investing and maintaining cryptocurrencies is still the most common way to enter the digital asset market, many companies have also been offering customers ways to earn interest on their investments in recent years.
These companies work much like traditional lenders, such as banks or credit unions, but lend cryptocurrency, such as dogecoin, instead of a fiat currency, such as the dollar. Investors get crypto dividends based on the amounts that companies lend to borrowers and lenders can take out crypto loans from different platforms.
Celsius is one of the many cryptographic providers and quickly became the most prominent. Founded in 2017, it has attracted significant investors.
Last October, Canadian pension fund giant Caisse de dépôt et placement du Québec invested $ 400 million in Celsius. It was a first step in the cryptographic world of an established Canadian pension fund manager. Shortly afterwards, Ontario Teachers’ Pension Plan participated in a $ 420 million round of funding for the FTX Exchange trading platform that same month.
“Celsius is the world’s leading cryptocurrency provider with a strong management team that puts transparency and customer protection at the core of its operations,” said Alexandre Synnett, Caisse’s chief executive and chief technology officer. press for your investment. at the time.
But Jarrett Vaughan, a business professor at the University of British Columbia who studies blockchains and cryptocurrencies, said it’s hard to see how institutional investors won’t be scared off the market with the announcement of Celsius. “Risk can come with a reward, so if you’re investing in a risky environment like crypto, you have to be aware that something like this is happening. And hopefully now, this is a risk that you will be more aware of.” he said.
The Caisse’s investment, in collaboration with San Francisco-based venture capital firm WestCap Investment Partners LLC, placed a total value of $ 3 billion in Celsius. Other investors in Celsius include Tether International Ltd., a tether issuer, a stable currency cryptocurrency linked to and backed by the US dollar.
WestCap and Celsius did not respond to requests for comment.
In a statement to The Globe and Mail on Monday, Caisse defended Celsius. “In an environment of widespread market declines, investors are reducing their risk in all asset classes. In this context, Celsius has been hit by very difficult markets in recent weeks, more specifically, the strong volume of customer withdrawals, “wrote Kate Monfette, a senior Caisse spokeswoman, adding that her team is” following the situation closely “. ”
Ms Monfette would not say whether Celsius’ announcement would affect Caisse’s future plans for cryptocurrency investments. “Celsius is taking proactive steps to meet its obligations to its customers and has so far fulfilled its obligation to its customers,” he said.
Ledn, a Toronto-based cryptocurrency company that operates as Celsius, has seen its managed digital assets grow by billions over the past three years. “I really hope that this one-time article on Celsius doesn’t lead to widespread conservatism in space, certainly not from investors,” Adam Reeds, Ledn’s CEO, said in an interview.
However, this is not the first time Celsius has faced scrutiny. Earlier this year, Celsius came under immense pressure from crypto market observers, who believed the company had a role to play in the dramatic crisis of the luna and terrasUSD cryptocurrencies. Celsius had answered these claims.
Late last year, a month after Caisse’s investment, Celsius chief financial officer Yaron Shalem was implicated in a fraud investigation by Israeli police. The company suspended him.
In a tweet on Monday, rival lending platform Nexo offered to buy Celsius-rated assets, calling it an “insolvency” that is causing repercussions for retail investors in the crypto community.
Nexo attached a letter of intent to its tweet, mentioning its interest in the Celsius secured loan portfolio, but did not provide a price for its offer.
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