TheChek News Flow

Crypto lender says it has an ‘open dialogue’ with regulators after suspending withdrawals

Celsius Network, the cryptocurrency lender that rattled markets by suspending withdrawals last week, has warned that it will “take time” to normalise its operations, as companies across the sector face mounting financial pressure from a sell-off in digital assets.

The crypto lending company’s warning came after a series of shocks to digital asset markets have dragged down prices. The price of bitcoin, the largest cryptocurrency, fell below $20,000 over the weekend for the first time since November 2020.

Bitcoin was down 3.6 per cent against the dollar in Asia trading on Monday at $19,864, reversing an earlier rally that had pushed it back above the $20,000 mark.

The drop for the most actively traded digital currency has raised concerns over forced liquidations of large leveraged bets in crypto markets, which could spur further sales and intensify a credit crunch that has already triggered tumult at other crypto lenders.

“As has been a priority since our company’s inception, we maintain an open dialogue with regulators and officials,” Celsius wrote in a blog post on Monday. The lender added that it was pausing social media activities on Twitter and Reddit, which it had been using to maintain contact with customers.

“We plan to continue working with regulators and officials regarding this pause and our company’s determination to find a resolution,” it said, without providing further detail.

The crypto chaos began when stablecoin TerraUSD, which was used to facilitate trading through its link to the US dollar, failed to maintain its dollar peg last month, causing the peg of its larger stablecoin peer Tether to wobble.

The instability quickly spread to another stablecoin and its associated cryptocurrency, luna, which is a key player in decentralised finance, a sector of the industry that seeks to do away with centralised intermediaries such as banks.

Pressure from the broad sell-off in cryptocurrencies has continued to grow. On Friday, Hong Kong-based crypto lender Babel Finance paused withdrawals and redemptions, citing “unusual liquidity pressures”, while Singapore-based crypto hedge fund Three Arrows failed to meet margin calls from lenders.

On Monday, another Hong Kong-based crypto exchange Hoo announced a halt on transactions after customer withdrawals became so great that they risked exhausting the company’s available funds.

Hoo said in a blog post that it was “trying to reconfigure medium- and long-term assets in an orderly and reasonable manner” to facilitate withdrawals, which it said would resume within 72 hours.

- Recent sudden forex moves are undesirable

- Hope to coordinate closely with govt and respond appropriately on FX

- No particular comments from PM

- Today's meeting was part of routine regrading the global economy

With a running total of more than 114 million euros, it's the second most valuable collection ever sold at French auction, according to Christie’s in Paris

MISSION ACCOMPLISHED: The facades of the San Lorenzo Cathedral in Perugia, in Italy’s central Umbria region, have been restored thanks to contribution of the Brunello and Federica Cucinelli Foundation.

“I have always liked to think that by preserving our monuments we somehow preserve ourselves and lay the foundations of our future,” said Brunello Cucinelli. “Today we are inaugurating the restoration of a famous monument, which is not only a religious symbol for the people of Perugia but for Italy as a whole. I learnt from my family, and from the countryside, that every good deed is like a seed that never fails to bear good fruit. This is why I wish everyone that the example of this good work will trigger virtuous imitation on the large as well as the small scale, public and private, because, as my esteemed Greeks used to say, if you keep your doorstep clean and tidy, your city will follow. I am convinced that this is what our Perugia and our Umbrian motherland deserve.”

The project was revealed in July last year. The foundation collaborated with Plenitude, a company controlled by Eni that integrates production from renewables, the sale of gas and electricity, energy services and an extensive network of charging points for electric vehicles.

The restoration, which took advantage of the national tax bonuses for the renovation of buildings established by the 2020 Finance Act, focused on the front and side facades, as well as the external stairs and a bronze sculpture dedicated to Pope Giulio III.

In addition, the stone parts were cleaned and concrete inserts were switched with more appropriate materials to enhance the artistic and historic value of the monument, which was built in the heart of Perugia between the 14th and 15th centuries. The Carrara marble pulpit, the bell tower and the Jubilee portal were only some of the storied elements restored.

Previously, along with the Solomeo medieval hamlet, home to the brand’s headquarters and a 20-minute drive from Perugia, Cucinelli financed the restoration of the Etruscan Arch and the Morlacchi Theater in Perugia, as well as the Civic Tower in Norcia.

DAX:

MDAX:

SDAX:

Markets have been hammering crypto portfolios in recent months, with once-celebrated DeFi projects slashing jobs and freezing withdrawals as crypto prices plunge from last year's record highs. Investors may be asking what sparked this drastic shift in market sentiment toward the digital assets.

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, has pointed the finger of blame at the Federal Reserve and its aggressive interest rate hikes.

"The core driver of [the crypto downturn] has been the Fed," said Bankman-Fried, who told National Public Radio on Sunday that the outlook for FTX was now primarily guided by what the Fed will do.

On Thursday, the Federal Reserve raised interest rates by three quarters of a percentage point, its largest hike since 1994, to bring the benchmark funds rate to 1.5%-1.75%. Rates are now back to where they were before the COVID pandemic hit in March 2020. And the prospect of further interest rate hikes may mean more bad news for the crypto markets.

"People with money are scared,” Bankman-Fried told NPR. 

Crypto proponents have portrayed digital currencies as both an inflation hedgeand a portfolio diversifier, but the behavior of crypto markets in recent months has undercut these claims.

Cryptocurrency values have fallen amid soaring consumer prices and interest rate hikes, thus proving to be a poor hedge against broader economic conditions. Crypto prices have also crashed in tandem with sinking stock markets, making them less valuable as a way to diversify portfolios. Bitcoin and Ether are down 58% and 71% for the year, respectively. (In contrast, the S&P 500 is down just 23% for the year).

Cryptocurrencies are instead looking more like a risk asset, similar to equities. Low interest rates and an era of “easy money” drove investors towards riskier plays, like cryptocurrencies, meme stocks or—for wealthier investors—venture capital in the hope of getting higher returns. That era may be over as a recession looms and interest rates rise, meaning investors are fleeing to safer assets. 

Negative investor sentiment is putting pressure on the overall cryptocurrency sector. Last week, several crypto projects, like lenders Celsius Network and Babel Finance, and hedge fund Three Arrows Capital, halted parts of their operations due to liquidity concerns. 

FTX is currently weathering the bear market better than some of its competitors, which Bankman-Fried credits to a more responsible attitude to hiring than his more aggressive competitors. Exchanges like Coinbase and Gemini are laying off employees after a spate of hiring during last year's crypto boom.

Cryptocurrencies went through a slight rebound in weekend trading. Bitcoin bounced back 7.9% over the previous 24 hours to reach $19,908 by noon Hong Kong time. Ether rose 12.3% to reach $1,071 over the same period.