Celsius founder and CEO Alex Mashinsky appeared in a Celsius promotional video uploaded to YouTube. Screenshot: Celsius / YouTube
The Celsius cryptocurrency network has halted all negotiations, including withdrawals, according to a company press release released overnight. The unusual move comes when major cryptocurrencies plummeted over the weekend and there are serious questions about whether Celsius will ever allow users to withdraw their money thanks to a rather slippery language in their terms of service.
“Due to extreme market conditions, we are announcing today that Celsius is pausing all withdrawals, exchanges and transfers between accounts. We are taking this action today to put Celsius in a better position to meet its obligations over time. “the company said in a statement to Medium.
“Acting in the interest of our community is our highest priority. In service of this commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow us to carry out this Celsius has valuable assets and we are working diligently to meet our obligations, “the statement said.
Celsius, which claims to have 1.7 million users, allows people to trade with major cryptocurrencies such as bitcoin (13.2% less in the last 24 hours) and ethereum (17%), promising incredibly high returns for to the people who had it (HODLing, in the community language), with the service.
But what do these “terms of use” Celsius mean? On the one hand, these terms of use allow Celsius to stop all trade, as they have already done. They also say explicitly that if Celsius goes bankrupt, you may never have access to your money again, which American consumers in traditional banks should not worry about thanks to the FDIC.
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From the Celsius Website Terms of Use:
In the event that Celsius goes bankrupt, goes into liquidation, or is unable to pay its obligations, eligible digital assets used in the Earn service or as collateral under the loan service may not be recoverable, and may not be recoverable. have no legal or legal recourse. in connection with Celsius’ obligations to you, except your rights as a creditor of Celsius under any applicable law.
Interestingly, Celsius claims that users will still “accumulate rewards” while everything else is paused, which supposedly means that users will earn these ridiculously high interest rates with fake internet money. But it is unclear what good interest rates might be if Celsius is unable to restart operations.
“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations as we take steps to preserve and protect assets. In addition, customers will continue to accrue rewards during the break in accordance with our commitment to our customers, “Celsius said.
Those ridiculously high “rewards” and interest rates sounded great, according to a promotional video that Celsius posted on YouTube in April and titled “Why Choose Celsius?”
When can Celsius users wait to access their money? The company seems to have predicted that people will be restless. And they are still not making any promises about a timeline.
“We understand that this news is difficult, but we believe that our decision to stop withdrawals, exchanges and transfers between accounts is the most responsible action we can take to protect our community. We are working with a unique approach: Protecting and preserving assets to meet our obligations to customers Our ultimate goal is to stabilize liquidity and restore withdrawals, exchanges and transfers between accounts as soon as possible. we are considering several options, this process will take time and there may be delays, “Celsius said.
Do you take all this? There may be delays.
For his part, Celsius founder and CEO Alex Mashinsky has been shut down on social media for the past few hours since the withdrawal pause was announced. But recently, Saturday night, Mashinsky accused people questioning Celsius’ liquidity of spreading “FUD,” an acronym in the crypto world that means “fear, uncertainty, and doubt.”
Mashinsky did not immediately respond to a Gizmodo email Monday morning.
Accusing someone of spreading FUD is one of the biggest insults of the crypto-enthusiast community, but it doesn’t look like FUD is spreading right now. It was an old, healthy skepticism about cryptocurrencies: a way to make money that seems to work more like a pyramid scheme than a solid financial system.
The stoppage, at least temporarily, of Celsius is not the first major implosion in recent weeks. Terra and its cryptocurrency Luna melted when its stable currency entered a death spiral in a matter of days. What did Luna founder Do Kwon do after losing millions? He launched a new currency called Luna 2.0.
Boldness must be respected. Almost.