Cryptocurrency lending firm Celsius Network will halt withdrawals and transfers between accounts due to “extreme market conditions”, the company said on Monday in the latest sign of pressure in the crypto industry.
The Celsius CEL token sank 53% to 18 cents as of 11:13 am in Hong Kong, according to pricing data site CoinGecko, leading to a fall in the crypto asset, sending bitcoin to its lowest level since December 2020.
Doubts about sky-high yield support protocols such as Celsius have intensified after Terra’s collapse in May and as tighter monetary policy from global central banks curbed demand for riskier assets. According to its website, the CEL token promises “real financial rewards,” which include an additional 30% weekly return.
“We are taking this action today to better position Celsius to honor its withdrawal obligations, over time, as needed,” the platform said in a memo on its website. Having said that users will continue to earn rewards during the pause.
Bitcoin expanded in an earlier decline following the Celsius announcement, dropping more than 6% to a low of $24,888, an 18-month low. Ether, the world’s second-largest cryptocurrency, fell more than 8% to $1,311, its lowest since March 2021. The company said.
“In addition, customers will continue to earn rewards during the pause in line with our commitment to our customers.”
Celsius Network, which raised $750 million in funding late last year, is a significant player in crypto lending. It offers interest-bearing products to customers who deposit their cryptocurrencies with the company, and lends cryptocurrencies to earn returns.
While the sector has come under regulatory scrutiny, the US crypto markets in particular have been under pressure in recent months, with other so-called risk assets falling as interest rates have risen around the world.
The price drop has also been caused by and contributed to the collapse of some crypto projects, most notably the collapse of the stablecoin TeraUSD. TeraUSD broke its dollar peg last month and rocked the crypto industry.