Celsius has decided to put a hold on withdrawals and related activities on its platform. There will also be no transfers or crypto swapping. The crypto lending platform says it takes the decision due to poor market conditions.
More obviously, the decision comes from long-term rumors that the platform might become insolvent. The fears follow the continuous decline seen in the crypto market this year.
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Access to Funds Obstructed: Firm Seems to Hit a Crisis Mode
The news of halting all customer financial activities on Celsius’ platform came via a blog post. The firm posted on the 12th of June to inform all users of the latest development.
The blog post stated that Celsius takes the action to put it in a better place. The better place sought will enable it to grant users’ withdrawal requests in the long term. The platform sees a relatively high withdrawal request.
It is also a means of adhering to its risk management protocol to safeguard the firm. Celsius possesses valuable benefits and it is working hard to perform its duties.
Celsius also mentioned that it would intensify efforts to preserve its liquidity while it shuts down. This is necessary to secure all the firm’s assets. It is seen as the most responsible step to take by Celsius to better serve its users.
Celsius belongs to a group of growing firms that have their operation in the CeFi sector. They leverage on DeFi sector while they act as custodians for crypto holders.
Users are at the Center of Every Decision
For the firm to offer higher yields to users, it drops funds in decentralized finance protocols. Nevertheless, the latest trends in the market have affected Celsius’ high yield capacities as promised. The condition has caused a ripple effect of insolvency fears in the Celsius community.
The insolvency fears increased after Lido lost its parity with Ethereum. It intensified concerns that Celsius might have sold its staked Ethereum in order to pay its users. Alex Mashinsky, Celsius CEO, refuted claims of insolvency many times recently.
The latest update is the first of its kind as Celsius is now obstructing users from the assets. It is an unbelievable move for a firm as large as Celsius. The firm got to $20 billion in assets under its management.
The firm said it raised $750 million in a fundraiser last year, with more than 1.7 million users.