Celsius is a cryptocurrency lending company that works similarly to banks, but with much higher risk since the deposits are not federally insured as they are decentralized. The platform, which has 1.7 million users, allows cryptocurrencies to be deposited in exchange for abnormally high interest rates, up to 18% (a savings account usually gives between 1% and 2%) .
To pay these high prices, Celsius takes these deposits and either invests them or lends them to traders and charges a high interest rate for the loan. Exactly one month ago, June 14, Celsius announced which suspended all withdrawals, exchanges and transfers between user accountsciting “extreme market conditions as the cryptocurrency crisis deepened over the weekend. In a post on its official blog, Celsius alluded that due to the extreme market conditions, “Today we are announcing that Celsius is suspending all withdrawals, swaps and transfers between accounts.
“We are taking this action today to put Celsius in a better position to meet its pension obligations over time.” The company said it was “activating a clause in our Terms of Service” to freeze user funds and was seeking “stabilize liquidity”while warning that “This process will take time, and there may be delays.” In other words, Celsius has fabricated a crypto park to keep its assets from bleeding financially.
As we read on the Vice sitethis extraordinary measure (already hopeless) helped to continue the sell-off in the cryptocurrency market, already affected by the fall of coins as heavy as Bitcoin and Ethereum -BTC is currently trading at $23,809 and ETH at $1,251- and Celsius’s own token (CEL) falls over 40 cents at 14 cents, before settling at just under 30 cents.
No, you can’t touch your money
CEL, the Celsius token, fell again on June 14 and fell over 17%, the lowest level since December 2020. Celsius was bleeding and the shock hit Bitcoin again.
The crypto park may have helped keep Celsius from succumbing to instability, but its effects were felt by investors, who literally couldn’t do anything with their money, withdraw it or anything, until that Celsius once again lift this ban on the operations that a park involves. And if you are one of those who have all the savings invested directly in cryptocurrencies and Celsius, the burden is undoubtedly more extreme.
As reported the New York TimesCelsius filed for bankruptcy a month after stopping all customer withdrawals and transfers. According to the latest information from Coinbase, the Celsius token is now worth about 67 cents. As The Journal points out, the fact that Celsius offered its customers far better returns than traditional banks and made large loans backed by few collateral left the company little room for maneuver when it felt the effects of the cryptocurrency crash.
The crypto lender’s board explained that the pause in withdrawals was difficult but necessary. After declaring bankruptcy, from Celsius they indicated that “Without a pause, the acceleration of withdrawals would have allowed some customers – those who were the first to act – to receive full payment while leaving others to wait for Celsius to reap the value of illiquid or longer-lived assets before proceeding. get a recovery. “
Bankruptcy will not prevent the investigation
Since Celsius is not seeking court approval for withdrawals, they will likely remain inaccessible as long as the company is being restructured as part of the Chapter 11 process. Although the bankruptcy filing protects Celsius from certain actions by regulators, it will not prevent authorities from investigating the company. Texas State Securities Board Director of Enforcement Joseph Rotunda noted that the agency will continue to investigate the crypto lender.
The states of Alabama, Kentucky, New Jersey and Washington are also investigating Celsius after it cut off people’s access to their money.