One of the largest Cryptocurrency Lenders, said late Sunday, it has suspended Withdrawals, the latest casualty in the fast-falling Bitcoin world. Celsius Network told its 1.7 million Customers that they have No Access to their Money until further Notice due to “extreme market conditions.”
“We understand that this news is difficult,” the Hoboken, N.J.–based firm said in a Statement. “We are working diligently to meet our obligations.”
In related News, Chinese Crypto Exchange Binance on Monday morning, Blocked Bitcoin Withdrawals due to “a stuck transaction causing a backlog.”
Celsius was Co-founded Four years ago by CEO Alex Mashinsky, named a Top Entrepreneur by Crain’s in 2010, for his work in Internet Telephony.
The firm joined Jersey City–based BlockFi as popular Venues for Crypto Speculators. Both Lenders lured Customer Dollars with the Prospect of High Yields, then used those Deposits to Fund Trades or other Activities, including Bitcoin Mining.
Celsius had about $12 billion in Client Assets last month.
In certain ways Celsius and BlockFi resemble Money-Market Funds, which are Noninsured Accounts that Pay Investors higher interest rates than Banks do. The difference is Celsius attracted Money by offering Yields of up to 18%, and Money-Market Funds return less than 1%, according to Crane Data, a Research firm.
The $4 trillion Money-Market Fund sector was seriously stressed during the 2008 Financial Crisis. Now Celsius and its brethren are being tested by the Collapse in Bitcoin, which has shed All Gains of the past 18 months, and Lost Two-Thirds of its Value, including a 16% drop in the past 24 hours, according to CoinMarketCap.
In April, Celsius announced Ownership of more than 150,000 Bitcoins and said its Mission was “to put unparalleled economic freedom in the hands of the people.” Now Celsius has locked the door. It’s the latest and perhaps most serious piece of Bad News for the Sector.
In February, BlockFi paid $100 million to Settle a Case brought by the U.S. Securities and Exchange Commission and State Regulators, alleging Violations of Investor-Protection Laws.
The New Jersey Bureau of Securities, in the summer, ordered Celsius to halt Sales of Interest-Earning Crypto Accounts because they were deemed Unregistered Securities.
A few months later, the Firm revealed that it had raised Venture Funding at a $3.25 billion Valuation in a round led by a Canadian Pension Fund.
“There is a lot of work ahead as we consider various options,” Celsius told Customers Sunday. “This process will take time, and there may be delays.”
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