Lending platform Celsius has paused withdrawals, transfers and the exchange function.
“Due to extreme market conditions, we are announcing today that Celsius is halting all withdrawals, trades and transfers between accounts. We are taking this action today to put Celsius in a better position to meet its withdrawal obligations eventually.” here is latest announcement of the Celsius lending platform.
Weakened by the fall in cryptocurrency prices, Celsius is accused of having camouflaged a liquidity crisis. A blow for this platform which has 1.7 million customers and claims around 12 billion dollars in assets under management.
Blocked transactions
Launched in June 2018, Celsius is an exchange for buying and reselling digital assets. Recently, it suspended access to withdrawals for its customers. Now, they can no longer withdraw their funds and exchanges and transfers of funds have been cut as well.
Today, the main fear of Celsius customers who want their funds back is that the company does not have enough cash.
Hopes and a collapsing course
“We understand that this news is difficult, but we believe that our decision to pause withdrawals, exchanges and transfers between accounts is the most responsible action we can take to protect our community”, justifies the press release. Wanting to be reassuring, the text adds, “our ultimate goal is to stabilize liquidity and restore withdrawals, exchanges and transfers between accounts as quickly as possible”.
Even if the hope is there, for the moment, the figures do not follow this momentum of positivity. Since the announcement, the price of the CEL token, linked to the Celsius platform, has collapsed by 75%. It went from $0.365 to $0.09 in 20 minutes. Currently, the CEL price is set at $0.18.
Faced with this curve, Nexos, Celsius’s main competitor in the lending sector, hastened to reassure its users on Twitter. In its message, the platform confirms that its assets are doing well and are even sufficient to buy those of Celsius.
The weakened decentralized finance ecosystem
For its part, bitcoin has lost 9% of its value and is now around 25,000 dollars. Ether has lost 11% of its value and is trading around $1,300. In a context of a cryptocurrency system weakened by the collapse of the Terra ecosystem, the delay in the date of the Ethereum merger only accentuates tensions. The merger in question concerns the transition from Ethereum to Ethereum 2.0. In other words, from a system known as “proof of work” (Pow, “proof of work” in French) to that of “proof of stake” (PoS, “proof of stake” in French).
The main advantage of PoW is to provide significant security. Its main disadvantage is to consume a lot of energy. Unlike PoW, PoS does not require solving calculations before creating a new block and therefore requires much lower power consumption.
_
Follow Geeko on Facebook, Youtube et Instagram so you don’t miss any news, tests and tips.
