Celsius Network, one of the biggest crypto lenders, told customers Sunday evening that it is pausing withdrawals, swap, and transfers between accounts in a move that has sparked discussions and has prompted the price of the firm’s token to take a 60% tumble in the past one hour to 19 cents.
“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” wrote Celsius, which counts stablecoin-issuer Tether International, growth equity fund WestCap Group and Canadian pension fund Caisse de Dépôt et Placement du Québec among its investors.
“Acting in the interest of our community is our top priority. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations.”
Celsius, which was valued at $3.25 billion when it extended its “oversubscribed” Series B financing round to $750 million in November, allows users to deposit their Bitcoin, Ethereum and Tether and receive weekly interest payments. Depending on the time horizon and the token, the platform offers as much as 18% interest a year. On its website, Celsius says 1.7 million people call “Celsius their home for crypto.”
The announcement follows one of the brutal weekends in the cryptocurrency market that saw hundreds of millions of dollars worth of liquidation. At the time of publication, Bitcoin was trading at about $25,585 and Ethereum at $1,346, some of their lowest levels in over a year. Other high-profile crypto projects including Solana, BNB and FTT were also down.
Crypto lenders are facing increased scrutiny following the collapse of Terraform Labs’ Luna and its sister token UST last month. Alex Mashinsky, chief executive of Celsius Network, has been trying reassure customers in recent weeks, saying that they can withdraw their assets at any time and questioned skeptics. The firm also launched a recurring promotion recently, offering customers rewards if they transferred assets into Celsius accounts and kept them there for up to 180 days.
But Celsius has also grappled with high sell-offs in recent months. The lender says on its website that it has about $3.8 billion of assets, down from $24 billion it disclosed in late December 2021.