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DeFi lending giant Celsius halts withdrawals

DeFi lending giant Celsius halts withdrawals

The Celsius Network, a decentralized financial platform (DeFi) and one of the largest cryptographic lends, announced Sunday evening that it “paused for all withdrawals, exchange, and transfers between the accounts.” It has 1.7 million customers.

The company’s token, Cel, is negotiated at 23 cents when writing this article, according to coinmarketcap. This represents a decrease of 92% compared to April 8, which was worth $3. The token was worth nearly $7 a year ago.

There have been questions about the high yields of Celsius Networks, its connections with the failure of the Terra de Stablecoin, and its reserves. The value of assets on its platform fell halfway to $ 12 billion in May, compared to 24 billion dollars in December 2021. The Financial Times reported that a billion dollars came out of the system between March and May.

In a blog article of June 7 entitled “Damn the Torppeo,” the company declared: “Celsius has the reservations (and more than enough ETH) to comply with the obligations, as dictated by our complete framework for risk management of liquidity.”

It was then. On June 12, an email to all customers started like this:

Due to extreme market conditions, we are announcing that Celsius is pausing all withdrawals, Swaps, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.

In theory, Celsius works in the same way as an ordinary bank does, except in cryptocurrency. He collects the deposits and then lends them. An advertisement on the Celsius site has offered an annual return of 18.63 on cryptographic deposits. Unlike a bank, Celsius has no government insurance from the FDIC, which protects people in the event of a bank failure.

The skeptics have repeatedly warned that Celsius Network is necessarily failed. Some have even argued that Celsius is a Ponzi scheme.

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Because of its size, Celsius affects many other parts of the cryptocurrency markets. For example, Celsius Network borrowed $500 million from Tether, the shield in Pius in dollars. (Bloomberg reported that the loan was at $1 billion.) The loan is guaranteed in Bitcoin.

“If Bitcoin falls, they give us an appeal on the sidelines [then], we must give them more bitcoin,” the CEO of Celsius, Alex Mashinsky, at the Financial Times last year.

Even investors not directly involved in the cryptocurrency have an exhibition at Celsius. The second-largest retirement fund in Canada, Quebec Deposit and Placement Caisse (CDPQ) has invested in a 400 million dollar participation round for the company.

The regulators expressed their interest in Celsius Network operations. On September 17, 2021, New Jersey issued an order to stop and dedication to Celsius Network, Texas has planned an audience to determine if it should issue a cease-up. Alabama asked Celsius why It should not be prohibited for a month.

In October 2021, the prosecutor general of New York, Letitia James, included the company as one of the platforms asked to provide information on his activities and products. Celsius said that he was working with regulators in the state.

There is more. The Celsius financial director was arrested in Israel in November for suspicion of Money laundering, fraud, and sexual assault.

(These allegations focused on his behavior in his previous job; he was suspended from Celsius after the arrest.) When the DEFI Badgerdao platform was hacked in December, the blockchain activity showed that Celsius Network lost $54 million in crypto. Celsius said that the assets of customers and users were not affected.

In his note to his customers, Celsius said that “the company’s ultimate objective is to stabilize liquidity.” He did not give a date on which customers could expect to be able to withdraw again, warning that “this process will take time, and there can be delays.”

Source: SRG Blog

DeFi lending giant Celsius halts withdrawals

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