It looks like it’s going to be a long week for those holding crypto. On Sunday evening crypto lending firm Celsius announced it was suspending all activity due to “extreme market conditions.” The move prevented anyone with assets in Celsius from making withdrawals, transfers between accounts, or swaps. The company said the move was necessary to put it in a “better position to honor, over time, its withdrawal obligations.” In the aftermath all the big crytpocurrency values plunged, making it the second big sell-off in recent weeks.
Celsius made the announcement in a memo to its community. For the uninitiated, Celsius is a crypto lender and functions similar to a traditional bank. It takes deposits of crypto currency and also grants loans. Just like how you earn interest on the money you have in the bank, Celsius promised something similar. There’s a twist though; given how explosive crypto values have been, Celsius advertised an 18.63 percent annual return on your deposit. Even today that advertisement is still live on its website, via The Verge. One major difference between a company like Celsius and a real bank, however, is there is no such thing as FDIC insurance. Therefore, if the bank crashes, there’s no way to get your money back. On that note, Celsius says its recent action was taken to ensure the liquidity of its customers’ assets. “We are working with a singular focus: to protect and preserve assets to meet our obligations to customers,” the memo reads.
Of course, Celsius even has its own crypto token named CEL. Though it was worth $7 a year ago, as of now it’s around $0.30. The move seems to have impacted the big names in crypto as well. Both Bitcoin and Ethereum are currently plunging to levels not seen in years. As you can see above, Ethereum has lost 18 percent of its value in the past 24 hours. It’s now going for roughly $1,200 a coin, which is quite a fall from when it was at $4,700 per coin in November of 2021. Bitcoin is also being affected as well, with each coin now worth roughly $23,700. Its lost 10 percent of its value in the last 24 hours, and almost half its value in the past six months.
This current volatility comes exactly one month to the day after the previous bloodbath. The last time everything tanked was due to the spiraling of TerraUSD and its support coin Luna. Neither of those recovered, and as of this writing TerraUSD is priced at $0.01. Luna’s price is now a flat line, or $0.000064 per coin. For its part Celsius says it’s working on getting the trading lights back on, but it will take time. As the memo states, “There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.” For now it remains to be seen when Celsius will turn the tap back on. Judging by the comments on its memo post though, it will be facing a lot of angry customers when it does.