Weekly Update
This week has seen a steep decline in the value of Bitcoin and the entire crypto market, with the global crypto market cap down to $902.00B, following the news of the Celsius network. Bitcoin is down 0.07%, trading at $21,074.61, after falling 29.71% in the previous week. Polkadot fell 2.85%, while Solana, Ethereum, and Avalanche all fell more than 5%.
What is Celsius?
Celsius Network LLC is a corporation that provides cryptocurrency loans. Celsius, based in Hoboken, New Jersey, has operations in four countries and is a global company. Users can deposit a variety of cryptocurrency digital assets, such as BTC and ETH, into a Celsius wallet to receive a percentage return or borrow money using their cryptocurrencies as collateral. The company had lent out $8 billion to clients and managed about $12 billion in assets as of May 2022.
Why did Celsius ‘Pause’ all Withdrawals?
Celsius, as previously stated, manages $12 billion in assets and has over 1.7 million subscribers, according to a May 2022 report. The crypto market has recently experienced a tremendous sell-off, forcing this forecast to plummet even further.
Celsius is experiencing a liquidity crisis. The firm evaluated its assets and determined that if every client withdrew their funds, they would be unable to repay them.
Hence, the Network has ‘paused’ all withdrawals, inter-account transfers, and Swaps. According to the corporation, the measure is intended to stabilise asset liquidity and provide a greater possibility to meet withdrawal requirements. This has sparked a heated debate among investors about which is better between CeFi vs DeFi.
The company did not explain when the freeze would be lifted or what would happen next. It promised to return to normal operations “as soon as feasible,” but warned that the process would “take time” and potentially result in delays.
