Amid rising cryptocurrency sales, two popular platforms blocked investors from buying and selling digital assets.
Cryptocurrency lending company Celsius said on Sunday afternoon that it was preventing users from making withdrawals, transactions and transfers between accounts “due to extreme market conditions”. The company, one of the largest cryptocurrency lending platforms with approximately 1.7 million customers and more than $ 11 billion in customer assets, did not immediately respond to a request for comment Monday.
Hours after the announcement of Celsius, Binance became the second platform to stop transactions. CEO Changpeng Zhao he tweeted There would be a 30-minute pause in bitcoin withdrawals on Monday “due to a blocked transaction causing a delay.” This halt was prolonged, but negotiations resumed later on Monday.
.@CelsiusNetwork is pausing all withdrawals, exchanges and transfers between accounts. Acting in the interest of our community is our highest priority. Our operations continue and we will continue to share information with the community. More information here: https://t.co/CvjORUICs2
– Celsius (@CelsiusNetwork) June 13, 2022
According to Reuters, trade suspensions come amid a $ 1 trillion loss in cryptocurrencies in the last two months alone. Some investors are shunning risky investments in favor of more stable assets amid growing economic concerns and as the economy struggles with the highest inflation in the last 40 years.
Banking career
The shutdown of Celsius caused outrage and frustration on social media, and the company gave no indication in its announcement when it would allow users to access its funds.
“That’s not right. You’re losing confidence with your patrons and NOT ACTING IN THE BEST INTEREST OF YOUR COMMUNITY!” one person wrote to Celsius in response to their commercial shutdown announcement.
The total market value of cryptocurrencies fell below $ 1 trillion on Monday to $ 983 billion, the first time it has fallen below that mark since January 2021, according to CoinMarketCap.
The situation caused some social media users to compare Celsius with Robinhood, the trading platform used restricted customers of transactions in so-called meme stocks in early 2021 amid wild changes in their prices. This decision provoked hearings in Congress and control of regulators.
It is unclear whether Celsius depositors will recover all of their funds. A cryptocurrency lender is not regulated like a bank, so there is no deposit insurance or legal framework for anyone to get their money back first, as in a bankruptcy. Celsius investors, including the Quebec Pension Fund, may recover their investment before Celsius depositors do.
“That was another banking business. You’re not reinventing anything here. They were promoting their services as a better savings account, but in the end you’re another unsecured lender,” said Cory Klippsten, CEO of Swan Bitcoin, who for years he has been publicly skeptical of Celsius’ business model.
“This news is difficult”
Lending platforms like Celsius have recently been scrutinized for offering returns that normal markets could not support, and critics have effectively called them Ponzi schemes. It is the second notable collapse of the cryptocurrency universe in less than two months. The stable currency Earth imploded in early Mayclearing tens of billions of dollars in a matter of hours.
Celsius said he had “activated a clause in our Terms of Use” that allows him to stop trading.
“We understand that this news is difficult, but we believe that our decision to stop withdrawals, exchanges and transfers between accounts is the most responsible action we can take to protect our community,” Celsius said in a statement. . “We work with a unique approach: to protect and preserve assets to meet our obligations to customers.”
This only affects the Bitcoin network. You can still withdraw Bitcoin on other networks such as BEP-20.
This is likely to take a little longer to fix than my initial estimate. More updates coming soon. Thank you for your patience and understanding 🙏
– CZ 🔶 Binance (@cz_binance) June 13, 2022
The most popular cryptocurrencies, such as ether, solana and tether, have lost value in sales. In June alone, ether fell 7%, while bitcoin lost 6% of its value. Bitcoin has fallen in price since December 2020, Bloomberg News reported.
These falls are affecting cryptocurrency-focused companies such as Crypto.com and Coinbase. Crypto.com plans to lay off 260 employees, or 5% of its workforce, the company’s CEO Kris Marszalek said in a tweet on Friday.
Marszalek did not directly blame the collapse of the cryptocurrency market on layoffs, but tweeted “markets will turn around and when they do, you can be sure we will be ready to drive and capture the next wave of growth for cryptocurrency adoption.”
This means making difficult and necessary decisions to ensure continued and long-term sustainable growth by making specific reductions of approximately 260 or 5% of our corporate workforce.
– Kris | Crypto.com (@kris) June 11, 2022
Coinbase last month recorded a loss of $ 430 million in the first quarter as monthly active users decreased by 19%. The company also introduced a freeze on hiring this month, adding that some job offers may even be canceled.
Earlier this month, Gemini said it plans to lay off 10 percent of its staff, the first time the company has had to cut jobs, Bloomberg News reported. Bitso, Buenbit and Mercado Bitcoin encryption platforms have also cut staff.
—With a report from the Associated Press.
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