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Celsius pauses withdrawals amid market turmoil, triggering 74% drop in CEL

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Celsius network announced the suspension of withdrawals, swaps and transfers between accounts in a notice sent on Monday morning (GMT). The firm attributed the problem to “extreme market conditions”.

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After the US Department of Labor released its CPI inflation data last Friday, the cryptocurrency markets have been in free fall. Since then, the market capitalization has peak-to-trough churn of $213 billion.

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US consumer inflation hit a 40-year high of 8.6% in May, up 0.3% from the previous month, indicating that inflation and the associated cost-of-living crisis are out of control.

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The notice from Celsius is another sign that macroeconomic conditions are increasing pressure on the already stressed cryptocurrency sector.

Celsius takes steps to stabilize its operations

In response to pressure Celsius said the move would enable him to better fulfill his obligations in the long term.

The firm added that it needed to “stabilize liquidity and operations.” However, the notice confirmed that rewards would continue to accrue during the pause period.

“Acting in the best interests of our community is our top priority. Fulfilling this commitment and adhering to our risk management system, we have activated a clause in our Terms of Use that will allow this process to take place.”

This event caused the CEL token to drop by 74%. Support reached $0.0930, prompting an initial push back from the bulls.

But most of the ongoing hourly candles since then point to indecision.

Celsius token hourly chart
Source: CELUSD on TradingView.com

Now what?

In response, Coin Bureau’s Guy cited a “flight from Celsius Bank” and wondered if the firm would sell assets to improve its liquidity in the coming days.

According to @WatcherGuruCelsius sent $320 million worth of cryptocurrency to FTX before issuing a suspension notice.

In May, some Celsius users reported difficulties with the withdrawal of funds, which gave rise to rumors about the insolvency of the company.

Commenting on this in a statement sent by Cryptooshala on June 3rd, Celsius stated that he has no problem fulfilling withdrawal requests and fulfilling them as quickly as possible. Any withdrawal delays were due to issues beyond the control of the company. The company is working with affected customers to resolve the issue in these cases.

A spokesperson for Celsius said in an email that the firm is reasonably liquid:

“We can confirm that Celsius has the necessary reserves and that the company’s strong liquidity structure, established liquidity data practices and modeling are similar to those used by major financial institutions.”





Credit : cryptoslate.com

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