Celsius Network Pauses All Activities as Market Collapses and Major Coins Drop

As the market continues to slump, crypto lender Celsius Network Ltd. decided to pause its withdrawals, swaps and transfers on its platform, leading to a grand cryptocurrency selloff and prompting a competitor to announce a potential bid for its assets. 

As a result, the announcement created a huge fuss, as Bitcoin dropped as much as 10%, reaching its lowest level since December 2020, as well as other major coins that plunged steeply, such as Ether.

The announcement came as follows:

We are writing with a very important message for our community.

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

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.

We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.

We understand that this news is difficult, but we believe that our decision to pause withdrawals, Swap, and transfers between accounts is the most responsible action we can take to protect our community. We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring 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.

We thank the incredible Celsius community for your support today. It is our pleasure to serve you. Our operations continue and we will continue to share information with the community as it becomes available.

Sincerely,

The Celsius team

It is important to note that Celsius, which raised $750 million in funding late last year, is a significant player in crypto lending. It offers interest-bearing products to customers who deposit their cryptocurrencies with the company, and lends out crypto currencies to earn a return.

According to its website, the company had processed $8.2 billion worth of loans and had $11.8 billion in assets as of May 17. The company also mentioned last August that it had more than $20 billion in assets.

However, unusual token movements began on Sunday, around 6 pm EST when a huge amount of wBTC was removed from the Aave staking and lending platform.

So far, 9, 500 wBTC tokens (worth about $247 million) have been redeemed from Aave, and following several transactions, all these tokens have been sent to FTX exchange for unknown reasons. Moreover, 54,749 ETH (wroth about $74.5) have been also sent to FTX.

Since Sunday, Celsius has staked 204 million USDCs on Aave, and has deposited 10 million USDCs, in addition to 8.2 million DAI on Compound, which means that the total amount of the stable coins that have been re-staked by Celsius, almost matches the number of wBTC removed tokens. Nonetheless, it still not close to the value of wBTC and ETH combined.

Crypto and blockchain enthusiasts and experts have been commenting on the poor transparency that Celsius is providing, while keeping in mind that the company might sell the assets that were sent to FTX, or might stake them to earn yields.