On Sunday night, the crypto lender stopped all customer withdrawals. CEL fell quickly.
With crypto markets in freefall, the controversial crypto lender Celsius declared that it had stopped all customer withdrawals and swaps.
The company posted a Medium blog post saying that it took this action to ensure Celsius was in a better position to fulfill its withdrawal obligations over time. “We are taking the necessary actions for the benefit of all our community to stabilize liquidity operations and assets while we preserve and protect assets.” Customers will still be able to receive rewards even during this pause, in keeping with our commitment to them.”
According to CoinMarketCap, the company’s CEL token dropped 70% within an hour from Sunday’s prior high of $0.49 to $0.15.
Twitter users made comparisons between crypto investors and the Terra collapse, as well as to the infamous crypto Ponzi scheme Bitconnect.
Celsius’s announcement on Sunday was not a good day for the rest of crypto market. However, it is nothing to CEL’s dramatic drop. At the time of writing, Bitcoin was down 9.9%. Ethereum was down 9%. BNB was down 99%. Cardano fell 11%. Solana was down 12 %, and Dogecoin dropped 9%.
Celsius was launched in 2017. It offers high yield crypto deposits and lends to other crypto firms. This business model is shared with BlockFi, Nexo and other players. Many regulators have made it clear that they consider high-yield crypto-lending products unregistered securities offers over the past year. By last September, four states, New Jersey, Texas and Alabama, had sent Celsius cease-and desist letters. After the threat of legal action by the SEC, Coinbase shut down its own Lend product that was due to launch in September.
Blockfi settled with the SEC in February and 32 states for $100 million. They also agreed to properly register their investment products for approval by the SEC.
Similar settlements or plans have not been announced by Nexo and Celsius, its peers.
BlockFi CEO Zac Prin tweeted late Sunday night in response to the Celsius news and to unavoidable comparisons, stating that all BlockFi services “continued to operate normally”.
Alex Mashinsky, CEO of Celsius, was silent on Twitter on Sunday night at midnight EST. He did however share the blog post.