Crypto network Celsius halted all transactions, including withdrawals, according to a company press release released overnight. The unusual move comes as major cryptocurrencies fell over the weekend and there are serious questions about whether Celsius will ever allow users to cash out thanks to some rather slippery moves. language in its terms of service.
“Due to extreme market conditions, we are announcing today that Celsius is suspending all withdrawals, exchanges and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the company said in a statement on Medium.
“Acting in the interest of our community is our top priority. In service of this commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Service that will allow this process to take place. Celsius has valuable assets and we are working diligently to meet our obligations,” the statement continued.
Celsius, which claims to have 1.7 million users, lets people trade major cryptocurrencies like bitcoin (down 13.2% in the last 24 hours) and ethereum (down 17%), while promising incredibly high returns for people who held (HODLing, in community parlance), with the service.
In the event that Celsius goes bankrupt, goes into liquidation, or is otherwise unable to repay its obligations, any Eligible Digital Asset used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any remedy or legal right. in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under applicable law.
Oddly, Celsius claims that users will “still be earning rewards” while everything else is on pause, which presumably means users will be earning those ridiculously high interest rates on fake internet money. But it’s unclear what good interest rates might be if Celsius isn’t able to get operations back up and running.
“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets. Additionally, customers will continue to accrue rewards during the break in line with our commitment to our customers,” Celsius said.
Those “rewards” and ridiculously high interest rates all sounded pretty sweet, according to a promotional video uploaded by Celsius to Youtube in April entitled “Why choose Celsius?”
When can Celsius users expect to access their money? The company seems to have expected people to be nervous. And they’re not making any promises on a timeline yet.
“We understand that this news is difficult, but we believe that our decision to suspend withdrawals, exchanges and transfers between accounts is the most responsible action we can take to protect our community. We work with one goal: to protect and preserve assets to meet our obligations to customers. Our ultimate goal is to stabilize liquidity and restore withdrawals, swaps and transfers between accounts as quickly as possible. There is a lot of work to do as we look at various options, this process will take time and there could be delays,” Celsius said.
Do you catch all that? There may be delays.
For its part, Alex Mashinsky, Founder and CEO of Celsius has been quiet on social media over the past few hours since the withdrawals break was announced. But as recently as Saturday night, Mashinsky accused people who questioned Celsius’ liquidity of spreading “FUD”, an acronym in the world of cryptography which means “fear, uncertainty and doubt”.
Mashinsky did not immediately respond to an email from Gizmodo early Monday morning.
Accusing someone of spreading FUD is one of the biggest insults in the crypto enthusiast community, but it doesn’t seem like FUD is spreading at this point. It was old-fashioned, healthy skepticism about cryptocurrencies — a way of making money that seems to work more like a pyramid scheme than a sound financial system.
The at least temporary shutdown of Celsius is not the first major implosion in recent weeks. Terra and its Luna cryptocurrency melted when its stablecoin entered a death spiral in just one a few short days. What did Luna founder Do Kwon do after losing millions? He launched a new coin called Moon 2.0.
You almost have to respect audacity. Almost.
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