Bitcoin tumbles as crypto lender Celsius halts withdrawals
World’s leading digital token sinks to lowest level since 2020 as market comes under mounting pressure
Bitcoin and other leading cryptocurrencies tumbled on Monday after $12bn lender Celsius Network halted customer withdrawals, in the latest sign of intensifying strains across the digital assets industry.
The fall followed a suspension of withdrawals and transfers between accounts on Celsius, one of the world’s biggest crypto lending platforms, which blamed “extreme market conditions”.
The move dealt a heavy blow to the broader digital asset market. Bitcoin, the world’s most actively traded cryptocurrency, has dropped almost 20 per cent since Friday to below $24,000, its lowest level since December 2020, according to CryptoCompare data.
Selling had started at the weekend as concerns swirled among some traders that market tumult could imperil Celsius’s ability to meet redemption requests.
The platform is one of the biggest players in the market for digital yield products, providing users with the ability to lend out their tokens as collateral for other crypto projects. In return for lending their tokens, traders were able to earn annual yields of as much as 17 per cent.
Sentiment towards these high-risk projects cooled sharply after the terra and luna tokens — which were the foundation of another popular yield platform — collapsed in a matter of days. The value of assets deposited on Celsius’s platform shrivelled to less than $12bn as of May 17 from more than $24bn in late December.
Ether, which is considered a proxy for sentiment for digital asset projects that offer investors high yields, has dropped almost 30 per cent since Friday, leaving it down two-thirds in dollar terms this year to trade at $1,195.
Selling on Monday also ricocheted into the shares of crypto-focused companies. MicroStrategy, a tech company that invests heavily in bitcoin, tumbled 25 per cent in pre-market trading on Wall Street. US-listed crypto exchange Coinbase fell 17 per cent.
Binance, the world’s biggest crypto exchange by volume, added to the sense of gloom across crypto markets after it announced on Monday afternoon that it had temporarily suspended withdrawals of bitcoin from its platform due to a “stuck transaction”. The company could not immediately provide further details on the matter.
Celsius last year raised $400mn in an equity funding round led by Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, and WestCap, the fund set up by former Airbnb and Blackstone executive Laurence Tosi.
That fundraising came even as US regulators indicated they were scrutinising the industry. State authorities in Texas and New Jersey have alleged that Celsius’s yield-bearing accounts amount to an unregistered securities offering.
Celsius’s halt to withdrawals early on Monday was also a U-turn after it had spent several days rebutting accusations that customers could not make withdrawals. Chief executive Alex Mashinsky challenged critics at the weekend to find “even one person who has a problem withdrawing”.
Celsius, which has offices in the US, UK and Lithuania, said the redemption freeze was done for the “benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets”.
The group’s own coin, known by the ticker CEL, has lost half its value in the past 24 hours, according to CryptoCompare data.