Crypto lending firm Celsius pauses withdrawals, tanks 50%

June 13, 2022

By Murtuza Merchant

Crypto staking and lending platform Celsius has paused all withdrawals, swaps, and transfers between accounts due to “extreme market conditions.”

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the company announced in a blog post on Medium.

“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,” the company stated.

According to a recent report by Financial Times, the firm, led by Alex Mashinsky, reportedly had about $12 billion in customer assets as of May across 1.7 million users.

Reacting sharply to the news, the price of Celsius’s native Celsius token fell sharply on the news, falling 52% to $0.17 per token.

According to speculations on social media, Celsius has unstaked $247m worth of Wrapped Bitcoin from AAVE and sent it to the FTX exchange. Also, large amounts of Wrapped Bitcoin (WBTC), Ethereum, and other cryptocurrencies have been moved while simultaneously pausing withdrawals for users.

In unusual movements, cryptos from the mail DeFi wallet of Celsius began moving liquidity to FTX at 18:00 ET on June 12, as WBTC was removed from Celsius’s main AAVE staking and lending platform. The company had earned interest on its deposits stored in its DeFi wallet.

According to users, 9,500 WBTC tokens worth $247m have been moved from AAVE to the FTX exchange. Also, 54,749 Ethereum worth $74.5m has been moved to FTX.

While demanding answers for the funds’ movement, users further claim that the Celsius board is not transparent with their dealings.

The firm, overall, has been accused of moving $320m worth of liquidity to the FTX exchange.

About the author

Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.

Leave a Reply