As the cryptocurrency market faces a difficult period, lending platform Celsius has just paused withdrawals, transfers and the swap function. The price of the CEL token dropped more than 75% following the announcement.
Celsius in turmoil
In a tweet accompanied by a blog post, lending platform Celsius announced it was pausing withdrawals, swaps and transfers of cryptocurrencies between accounts on its platform due to “extreme market conditions. “
“We are taking this action today to put Celsius in a better position to eventually meet its withdrawal obligations. “
@CelsiusNetwork is pausing all withdrawals, swaps, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
– Celsius (@CelsiusNetwork) June 13, 2022
This announcement follows a drop in cryptocurrency prices over the weekend and talk on Twitter that Celsius Network is facing a liquidity crisis.
Indeed, Celsius users have blamed the platform for how they believe it has mismanaged its funds following the collapse of the Terra ecosystem and its UST stablecoin.
According to some, if Celsius were to falter, the platform would be forced to sell its large amount of stETH, which could accelerate the depreciation that Ether is already experiencing.
As a reminder, the stETH is a token issued by the Lido lending platform, which certifies that a user has staked ETH in the framework of Ethereum 2.0.
CEL token in default
Following the news, the price of CEL, the Celsius token, immediately began a plunge, collapsing from $0.365 to nearly $0.09, a drop of more than 75% in the space of just 20 minutes.
At the time of writing, the CEL token price is around $0.20 and is trying to climb back up :
CEL token price evolution since the Celsius announcement
Celsius maintains in its statement that this difficult decision was made to protect its users and meet its obligations:
We understand that this announcement is painful, but we believe that our decision to suspend withdrawals, swaps and transfers between accounts is the most responsible action we can take to protect our community. We are working with one goal in mind: to protect and preserve assets to meet our obligations to our customers. “
In any case, the Celsius platform may not be an isolated case. It remains to be seen whether BlockFi or Nexo, to name but a few, will make similar decisions in the coming days.
