Bankchain Briefing: What can we learn from the Celsius withdrawal freeze?￼
- This week, we try to make sense of the Celsius withdrawal freeze and discuss its implications for investors and the wider industry.
- We also hear from Zero Hash co-founder Edward Woodford on the convergence of DeFi and TradFi.
The crypto winter keeps getting harsher. Just a month after the Terra stablecoin de-peg sent shock waves throughout the industry, a new crisis has been causing panic in the world of digital assets and keeping investors up at night.
On Sunday, June 12, blockchain-based lending platform Celsius Network announced that it would freeze all withdrawals and transfers of digital assets on its platform due to “extreme market conditions”.
Celsius is one of the biggest players in the crypto lending space, with over $8 billion lent out to clients and nearly $12 billion in assets under management as of last month.
“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets,” the company wrote in a memo to its clients. “We understand that this news is difficult, but we believe that our decision to pause withdrawals and transfers between accounts is the most responsible action we can take to protect our community.”
The news triggered a steep decline in crypto prices, with the global crypto market cap dropping below $1 trillion for the first time since January 2021. The company’s native CEL token took a nosedive, dropping 70% within a day, from a high of $0.49 down to $0.15. Bitcoin hit an 18-month low of under $23000, while Ether dropped nearly 20% to below $1200.
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