Celsius Update: Withdrawals Still Frozen

Celsius has posted a brief update on its radical step this past weekend to halt all withdrawals. Via Twitter, Celsius stated:

“[We are] working as quickly as possible and will share information as and when it becomes appropriate. Acting in the interest of our community remains our top priority.”

Celsius added that as they are “working around the clock” there will be no Twitter Spaces this week – probably a smart move due to the rising level of frustration from their users who have been blocked from accessing their money on the platform.

The value of crypto held on Celsius has lost 50% of its value in the past few months according to multiple reports. The FT reported that Celsius held $24 billion in December and now (or as of May) is down to $12 billion. The run on the crypto bank has hammered its native coin as well. CEL started the year at over $4. Today, it is trading at around $0.60.

Celsius rocketed in popularity due to the high returns provided to crypto lenders. As of last week, Celsius was promoting over 18% in returns – far above any traditional bank’s savings rate. Yet this heightened return came with heightened risk – something that should come as no surprise to market veterans but a risk that many of its users probably did not anticipate. Many users may not have understood that Celsius’ terms of service eliminate much of the platform liability:

“By transferring Digital Assets to Celsius, or lending Eligible Digital Assets to Celsius while using the Earn Service, or otherwise using the Services, you will not be entitled to any profits or income Celsius may generate from any subsequent use of any Digital Assets (or otherwise), nor will you be exposed to any losses which Celsius may suffer as a result thereof. You agree and acknowledge that you are exposed to the possibility that Celsius may become unable to repay its obligations to you in part or in full, in which case any Digital Assets in your Celsius Account that are not using the Custody Service may be at risk of partial or total loss.”

And;

“In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under any applicable laws.”

The crushing decline of both traditional and digital asset markets will certainly lead to more scrutiny from policymakers with the easy target being cryptocurrencies and any loss endured by retail investors.

 

 

 

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