Celsius fails at “Lehman moment” for cryptography: collapse of digital currency lender causes bitcoin to slide again before bouncing above $ 20,000
By Calum Muirhead for the Daily Mail
Posted: 22:25, 14 July 2022 | Updated: 9:13 AM, July 15, 2022
One of the world’s largest cryptocurrency lenders has gone bankrupt, becoming the latest high-profile victim of selling in the digital currency markets.
The collapse of Celsius is a blow to the cryptographic industry and its reputation. In June, the company said it had more than 1 million users on its platform, most of whom now run the risk of being out of pocket.
Its demise caused bitcoin prices to once again fall below $ 20,000 as the sector continued to be besieged by a “cryptographic winter” that has hit the industry.
This morning, bitcoin had risen above that benchmark again, trading at $ 20,777.
The bankruptcy of Celsius is a blow to the crypto industry and its reputation. In June, the company said it had more than 1 million users on its platform, most of whom now run the risk of being out of pocket.
Celsius’ bankruptcy came about a month after the company froze withdrawals, which has trapped billions of dollars in customer accounts.
The assaulted company built one of the major cryptocurrency lending platforms assuring potential customers that it was less risky than a bank.
But yesterday that reputation was shattered by the crisis dubbed the crypto community a “Lehman Brothers moment” for the industry, as the company’s financial problems caused a domino effect that caused the fall of other major cryptographic companies.
The panic spread after a cryptocurrency called land, a so-called “stablecoin” that aimed to maintain a constant value against the dollar, saw its value crash after breaking its “point” with the green dollar.
In a filing in a New York federal court, Celsius listed between £ 847 million and £ 8.5 billion in assets, adding that he had initially decided to restrict withdrawals to avoid an increase in deposits that would have allowed some customers were paid in full. while “leaving others behind.”
Despite having billions in assets, the company revealed it only had £ 141 million in cash in hand.
Celsius announced that the bankruptcy process was “the best opportunity to stabilize the business” and allow it to undertake a restructuring.
“This is the right decision for our community and company,” CEO Alex Mashinsky said.
The rush to cryptography has been driven by very low interest rates in recent years and central banks have used quantitative easing to flood markets with cheap money.
Investors were also greeted by high-profile celebrities who paid to sell the coins in online ads, such as Snoop Dogg, Matt Damon and Gwyneth Paltrow.
But the sector was disorganized earlier this year, as fears about inflation, higher interest rates, the global recession and the war in Ukraine forced investors to flee high-risk assets. , including digital currencies.
The fall caused the prices of major cryptocurrencies, such as bitcoin and ethereum, to fall in value. Bitcoin has fallen nearly 59 percent so far this year, while ethereum has declined 71 percent.
The strong sell-off left lenders like Celsius facing a cash crisis as customers struggled to withdraw their funds, destabilizing the balance sheets of the entire industry.
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