Celsius Network has halted withdrawals due to “extreme market conditions” as the $12bn digital asset lending platform comes under intensifying strains from a broad pullback across the cryptocurrency market.
The group has faced mounting pressure in recent weeks as investors flee the market for crypto yield products, in which traders lend out their tokens in return for high rates of fixed returns.
Celsius said on Monday that it was “pausing all withdrawals, swap, and transfers between accounts” to place it in “a better position to honour, over time, its withdrawal obligations”.
The company, which was founded in 2017, is one of the biggest players in the crypto industry. Last year it raised $400mn in an equity funding round led by Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, and WestCap, the fund set up by former Airbnb and Blackstone executive Laurence Tosi.
The move by Celsius further weakened sentiment in the market for lending more established digital tokens as collateral to support new cryptocurrency projects. Last month, the terra and luna tokens — which were the foundation of another popular yield platform — collapsed in a matter of days.
The value of assets deposited on Celsius’s platform shrivelled to less than $12bn as of May 17 from more than $24bn in late December.
Celsius, which has offices in the US, UK and Lithuania, said that the freeze in customers’ ability to withdraw their funds was taken to “benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets”.
“Celsius has valuable assets and we are working diligently to meet our obligations,” the group wrote in a Medium post announcing the news.
The latest troubles at Celsius dealt a heavy blow to the broader crypto market. Ether, which is considered a proxy for sentiment for digital asset projects that offer investors high yields, shed a fifth of its value to trade at $1,321, according to Refinitiv data. Bitcoin, the world’s most actively traded cryptocurrency, dropped 12 per cent to just over $25,000, its lowest level since December 2020.
The group’s own coin, known by the ticker CEL, has lost half its value in the past 24 hours, CryptoCompare data show.
The platform had faced questions over the past week from clients who said they were unable to make withdrawals. Chief executive Alex Mashinsky challenged critics at the weekend to find “even one person who has a problem withdrawing”.
Additional reporting by William Langley in Hong Kong