Crypto contagion fears spread after Celsius Network freezes withdrawals

Celsius Network logo and representations of cryptocurrencies are seen in this example taken, June 13, 2022. REUTERS/Dado Ruvic/Illustration WASHINGTON, June 13 ( Reuters ) – Bitcoin fell adenine much as 14 % on Monday after major U.S. cryptocurrency lending company Celsius Network freeze withdrawals and transfers citing “ extreme ” market conditions, in the latest sign of the fiscal marketplace downturn hitting the cryptosphere. The Celsius travel triggered a slide across cryptocurrencies, with their value dropping below $ 1 trillion on Monday for the foremost time since January 2021, sparking worries the rout might spill over into other assets or hit other companies. “ about anything can be systemic in crypto … because the whole outer space is over-levered, ” said Cory Klippsten, headman executive of Swan Bitcoin, a bitcoin savings platform. “ It ‘s all a house of cards. ”

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Celsius CEO Alex Mashinsky and Celsius did not respond to Reuters requests for comment. New Jersey-based Celsius, which has around $ 11.8 billion in assets, offers interest-bearing products to customers who deposit cryptocurrencies with its platform. It then lends out cryptocurrencies to earn a fall. read more After Celsius ‘s announcement, bitcoin touched an 18-month depleted of $ 22,725, before rebounding slenderly to around $ 23,265. No.2 token ether dropped a much as 18 % to $ 1,176, its lowest since January 2021. Companies exposed to cryptocurrencies have previously warned that declines in token prices could have ripple effects, including by triggering margin calls. “ It ‘s still an uncomfortable here and now, and there ‘s some contagion risk around crypto more broadly, ” said Joseph Edwards, steer of fiscal scheme at investment company management firm Solrise Finance. Crypto markets have dived in the past few weeks as rising interest rates and surging ostentation prompted investors to ditch riskier assets across fiscal markets. Markets extended a sell-off on Monday after U.S. inflation data on Friday, which showed the largest price increase since 1981, prompting investors to raise their bets on Federal Reserve rate hikes. read more That was likely the key driver of the crypto market dive, Jay Hatfield, headman investment policeman at Infrastructure Capital Management, wrote in a note on Monday. “ The Fed ’ s overexpansion of its balance sail led to a number of bubbles including technical school stocks, ( and ) crypto tokens, ” he said. Cryptocurrency investors have besides been rattled by the collapse of the terraUSD and luna tokens in May which was soon followed by Tether, the universe ‘s largest stablecoin, concisely breaking its 1:1 pin with the dollar. read more In a web log post on Monday, Tether said that while it has invested in Celsius, its lend activity with the crypto chopine has “ constantly been overcollateralized ” and has no shock on Tether ‘s reserves. The nominal was last trade flat at $ 1. besides on Monday, BlockFi, another crypto lend platform, said it was reducing its staff by about 20 % due to “ dramatic careen in macroeconomic conditions. ” BlockFi said that it has no exposure to Celsius. Bitcoin, which surged in 2020 and 2021, is depressed about 50 % so far this year. Ethereum is down more than 67 % this year.


Celsius says on its web site that customers who transfer their crypto to its platform can earn an annual return of up to 18.6 %. The web site urges customers to “ Earn senior high school. Borrow depleted ”. In a web log post on Sunday flush, the company said it had freeze withdrawals, angstrom well as transfers between accounts, “ to stabilise liquid and operations while we take steps to preserve and protect assets. ” “ We are taking this carry through today to put Celsius in a better position to honour, over time, its withdrawal obligations, ” the company said. Celsius ‘s nominal has fallen about 97 % in the last 12 months, from $ 7 to around 20 cents, based on CoinGecko data .


Crypto lending products have surged in popularity and many companies have launched offerings within the concluding year. That has sparked concerns among regulators who are worry about investor protections and systemic risks from unregulated lending products. read more Celsius and crypto firms that offer exchangeable services operate in a regulative “ grey area, ” said Matthew Nyman at CMS law firm. Celsius raised $ 750 million in fund end year from investors including Canada ‘s second-largest pension fund Caisse de Dépôt et Placement du Québec. Celsius was valued at the time at $ 3.25 billion. As of May 17, Celsius had $ 11.8 billion in assets, its web site said, down by more than one-half from October, and had processed a total of $ 8.2 billion worth of loans. Mashinsky, the CEO, was quoted in October last year saying Celsius had more than $ 25 billion in assets. equal crypto lender Nexo said on Monday it had offered to buy Celsius ‘ great assets. “ We reached out to Celsius Sunday dawn to discuss the acquisition of its collateralised loan portfolio. so army for the liberation of rwanda, Celsius has chosen not to engage, ” said Nexo co-founder Antoni Trenchev. Celsius did not respond to a request for comment on Nexo ‘s offer.

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Reporting by Tom Wilson and Elizabeth Howcroft in London and Hannah Lang in Washington; additional reporting by Abinaya Vijayaraghavan in Bengaluru and Alun John in Hong Kong; Editing by Jane Merriman, David Evans and Lisa Shumaker

Our Standards : The Thomson Reuters Trust Principles .

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