On Monday, crypto lender Celsius Network, paused withdrawals, swaps, and transfers of assets between accounts on the platform, citing “extreme market conditions.”
The popular crypto lending platform stated that it’s taking this precautionary measure to protect its community and strengthen its position to “honor, over time, its withdrawal obligations.”
However, the temporary withdrawal follows growing fears that the platform has become insolvent and unable to honor client withdrawals. Celsius is rumored to have been severely affected by the recent implosion of the Terra ecosystem, as well as the recent market decline affecting the status of customer funds deployed to decentralized finance (DeFi) protocols.
Following the latest temporary withdrawal halt, the price of Celsius’ native token (CEL) tanked more than 50% and traded at around $0.197 at the time of writing, according to CoinMarketCap data. The Celsius token price drop is part of the ongoing crypto market crisis. Bitcoin fell below the $24,000 mark and was trading around $23,845, while ETH dropped to a new low of $1,213.
Meanwhile, Celsius reassured customers that the $12 billion valued company, would restart the paused services as soon as possible.
“Our ultimate objective is to stabilize liquidity and restore withdrawals, Swap, and transfers between accounts as quickly as possible. There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.” the Monday memo said.
Tether Says Investment Relationship with Celsius Unaffected
The ongoing unstable market conditions that liquidated billions of dollars on arrival led to the freezing of users’ funds Celsius, including Tether (USDT) assets. Tether is one of Celsius’s strategic investors and sought to clarify its position amid growing tensions.
According to Tether, the company’s investment with the crypto lender did not affect its reserves or stability. The stablecoin issuer with four stablecoins pegged to the U.S. dollar, euro, yuan, and the Mexican peso, said that the company’s lending activity with the Celsius network “has always been overcollateralized and has no impact on their reserves.”
It also noted that its investment within the lending platform contains a small portion of its shareholder’s capital.
Nexo Offers a Buyout of Celsius Network
Recent events on Celsius have attracted another central cryptocurrency lending platform, Nexo, with plans to buy out its rival’s platform. In an open letter to Celsius, Nexo and its partners and affiliates have declared interest in bailing out the troubled business through asset acquisitions. These assets include its collateralized loan portfolio, brand assets, and customer database of the business.
Although the letter does not contain a buying price, it noted that the company is ready to commence negotiations upon the acceptance of the letter.
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