Crypto loan platform, Celsius, announced on Monday that they had stopped all “withdrawals, exchange, and transfer between accounts,” blaming the steps “extreme market conditions.”
Defining ‘extreme market conditions’ is not difficult – there are many proper candidates. This includes the collapse of Terrausd Stablecoin recently and a monthly inflation rate as high as 40 years by 8.6% was announced last Friday.
Celsius’s steps triggered a slide across cryptocurrency, with a total crypto value down below $ 1 trillion for the first time since January 2021. Bitcoin, the largest token based on market capitalization experienced 14% falling during weekends to below $ 23,000.
Bank Crypto
On its website, Celsius describes himself as one of providing a “centralized service platform that has been left by banks such as fair results, zero costs, and lightning fast transactions.” In other words, the Crypto Celsius lender is a bank. In particular, this is a decentralized or de-FI bank.
Celsius lent and borrowed Crypto similar to what traditional banks do with dollars, but without many infrastructure of traditional financial institutions.
This platform offers a very high return on the Crypto deposit, up to 18.6% before the break. This has caused some critics to suggest Celsius and others like that do not have enough assets to support deposits if something is run by investors to withdraw funds.
Pause is a big problem
Pause in withdrawal, exchange, and transfer-which is a reaction to volatility in the Crypto room-has produced more volatility because the company’s cel in-house tokens dropped 70% in one hour from the announcement.
Considering that the pause means that investors with money stored with Celsius cannot spend their money, a sharp decline is not surprising, especially given the concerns possessed by Critics about Celsius’s stability in the first place.
According to Celsius, the company has 1.7 million investors with a deposit of around $ 8 billion. There is no schedule for the end of the announcement.
Crypto provides controversy
Crypto Banks is increasingly popular – and controversy. Regulators and critics are concerned about the protection of investors and risks associated with non -regulated product loans such as cryptocurrency.
Lack of clear regulations place Celsius and such companies in the gray -gray area, with some critics calling for assets to be subject to regulations Securities and Exchange Commission (SEC) as a way to protect investors.
Investors have rushed to deposit their money at Crypto Bank because of a very high interest rate – as mentioned above, up to 18%, although 9% more common according to reporting by the Washington Post.
Underline
Effective freezing of funds by the Crypto Celsius lender shows a problem greater than the lack of regulations of institutions such as this bank.
This is especially true during the period of economic uncertainty that includes high inflation, market instability, and the desire of investors to get more “banged money” when it comes to savings interest.
While the Crypto loan platform offers attractive tariffs, problems with platforms like Celsius show the need for more and better consumer protection in Cryptocurrency finance.
