Cryptocurrency trading platform Celsius suspended withdrawals on Monday, driving a wider crypto price crash globally. The major exchange Binance has also halted Bitcoin withdrawals, attributing the issue to technical problems.
In a blog post titled “a memo to the Celsius community” published earlier today, Celsius said it had paused trading on its platform because of market volatility.
“As a result of the current market conditions, we are announcing today that Celsius is pausing all withdrawals, swap and transfers between accounts. Today’s action is a necessary next step to stabilize our business and protect our customers,” the lender said, which claimed to have nearly US$12 billion in assets as recently as May. “Our goal is to put Celsius in a better position to honor its withdrawal obligations over time.”
“Our No. 1 priority is to act in the best interest of our community. In furtherance of that commitment, and in accordance with our risk management framework, we’ve triggered a clause in our Terms of Use that means this process can go ahead. Celsius has significant assets and is doing everything possible to honor its obligations.
We are taking this required step in the interest of our whole community to stabilise liquidity and operations as we seek to preserve and protect assets. And customers will still be earning rewards for purchases during the pause period as part of our ongoing commitment to customer rewards and our customers.”
The decision follows weeks of turmoil in digital asset markets after the stablecoin Terra imploded. Bitcoin prices crashed about a quarter in mid-May after the Terra stablecoin failed to keep its peg to the US dollar.
Selling resumed again from 9 June, as investors shunned riskier assets in the face of more rate increases from the US Federal Reserve. Last week, the bitcoin broke the $42,000 ceiling. But at 5pm AEST today, it had slipped back to $32,802 a drop of roughly 23%. Bitcoin is down 50% year to date.
The negative sentiment has also impacted other coins as well. Ether traded for around $2,500 on 9 June, but is now $1,750.
Danni Hewson, financial analyst at AJ Bell, says he is seeing some painful scenes in the cryptocurrency media.
“If you read that suicide hotline numbers have been pinned to the sub-Reddit for Terrah, after users flooded the forum with their heart-breaking stories, you can’t help but be moved,” she says.
“The collapse of Terra has had a knock-on effect for other cryptocurrencies, including Bitcoin, which has fallen to 16-month lows. There is lots of chatter about tightening regulation of the space, but for the people who’ve lost what they couldn’t afford to lose, it’s too late. There will be, for the foreseeable future, tremendous market volatility and yes knee jerk moves are hard to resist but history teaches up follows down and sometimes the right move is no move.”
