Celsius Crypto Exchange Pauses All User Activity, Sends $320M to FTX
The crypto market has been struck with yet another unpleasant surprise as crypto trading and lending platform Celsius announced it would be halting all withdrawals, swaps and other transactions between accounts.
Celsius, a well-known crypto lender, paused withdrawals, swaps and transfers, exacerbating a broader market selloff as traders continued to question the market https://t.co/k07r6vAX6Z
— Bloomberg (@business) June 13, 2022
The news first reached customers by email, which was marked as “very important” to the community. Celsius cited “extreme market conditions” as the main reason for the grave decision, and hinted at a lack of liquidity preventing it from continuing its usual withdrawal procedures, saying “we are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations”.
A Liquidity Crisis Leading to a Massive Sell-off?
Speculation is circulating among customers of Celsius that the company mismanaged its digital assets in the wake of the Terra Luna crash. The failure of the Anchor protocol, which runs on the Terra blockchain, may have led to sell-offs as a means of stabilizing liquidity.
Furthermore, Celsius unstaked a massive sum of $247 million worth of Wrapped Bitcoin (wBTC) from Aave and transferred it to the FTX exchange. The project’s problems might not be over just yet though, as Celsius could yet sell a noteworthy portion of staked ETH (stETH). Crypto analysts fear that if a large chunk of Lido Staked Ether (stETH) is indeed sold, it would eventually lead to the asset depegging from Ethereum, thus resulting in a stETH crash.
At the time of this writing, the Celsius platform has already sent 54,749 Ethereum (ETH) to FTX, worth approximately $75 million USD. Over the weekend, Celsius staked $205 million USDC on Aave, and 8.2 million DAI on Compound. Nonetheless, these amounts are far less than the worth of the removed wBTC and ETH tokens. Further compounding these issues, according to business insiders, the situation between Celsius and FTX is heating up fast.
Alameda (trading arm of FTX) attacks celsius, who is borrowing $1bn from Tether. And Alameda is one of the biggest users of USDt.. if we wanted to speculate on how a 3rd bank run could happen, alameda unloading USDt for the benefit of Circle might take the cake.
— Ben Lilly (@MrBenLilly) June 13, 2022
The Motives are as Clear as Mud
The backlash from the crypto community has caused the network’s native token, Celsius Network (CEL), to drop dramatically over the past 24 hours. CEL saw its price reduced by more than half (54.4%), and is trading at $0.187998 at press time, according to CoinGecko. Moreover, this marks a 71.8% decrease over the last 7 days. In conclusion, it seems unlikely that Celsius will be able to bounce back before a clear explanation and motivation for its recent moves are provided to investors and customers.
Read more: https://dailycoin.com/celsius-crypto-exchange-pauses-all-user-activity-sends-320m-to-ftx/
Text source: DailyCoin.com
