What is Celsius and why is it blocking crypto withdrawals?

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Celsius, a popular cryptocurrency lender, announced Monday that it has indefinitely paused most transactions on its platform.

“Due to extreme market conditions, we are announcing today that Celsius is suspending all withdrawals, exchanges and transfers between accounts,” it said.

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Celsius usually allows users to deposit and withdraw cryptocurrencies

“We are taking this action today to better enable Celsius to meet its return obligations over time.”

The move comes after weeks of turmoil and turmoil in the crypto market since early May.

Bitcoin’s price has almost halved since May 1, while Ethereum has lost more than 50% of its value over the past six weeks.

According to CoinMarketCap, Celsius’ own crypto token, CEL, is trading at just 20 cents per coin after falling from $3 in April.

Every cryptocurrency investor should know that this is not a guaranteed way to make money.

Their prices are very volatile and can fluctuate widely without notice, meaning you could lose all your money.

That’s why it’s important not to invest more than you can afford or invest in something you don’t understand.

There is also little regulation for cryptocurrency firms, meaning you are without protection if something goes wrong.

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Celsius is a lending platform that allows cryptocurrency holders to borrow against their coins or deposit coins and earn interest while the platform lends their coins elsewhere.

It behaves like a bank, but with crypto instead of cash and no brick-and-mortar stores or FDIC support for your investments.

The company says users can earn up to 17% APY by depositing 43 forms of crypto, and Celsius sends weekly payments.

Loans start at less than 1% interest and there are no fees on the platform.

Over 1 million crypto traders use Celsius, making it one of the most popular cryptocurrency lending sites.

In August 2021, the platform announced that it had amassed over $20 billion in crypto assets after holding just $1 billion a year earlier.

Celsius and other crypto lenders have run into trouble with regulators in the past.

According to The Verge, New Jersey last year ordered and lifted a moratorium on certain Celsius loan products, and at least three other states are considering similar measures.

In addition to the risks associated with the volatility of crypto trading, using a platform like Celsius means crypto owners have to relinquish control of their coins on the platform.

“There’s a popular saying among crypto giants: Not your keys, not your coins,” Frank Korva, senior crypto and blockchain analyst at Finder, told The Sun.

“Giving up control of your private key to earn a return on your crypto assets adds another layer of risk to the investment.”

Celsius stops the extraction

The cryptocurrency market has seen a significant drop this weekend after tumbling in May and early June.

According to this, from Sunday June 12th to the morning of June 13th almost $1 billion was liquidated security guard,

This slowdown contributed, at least in part, to Celsius’ decision to suspend withdrawals, exchanges, and transfers.

“We are taking these necessary actions for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets,” the company said.

The Financial Times reported that Celsius’ assets fell from $24 billion in March to about $12 million last month before this week’s downturn.

However, several other factors may have contributed to the decision by Celsius CEO Alex Machinsky.

“There has been a lot of speculation as to what’s happening behind the scenes at Celcius, but it’s difficult to be certain what prompted the company to halt withdrawals and transfers for customers on the platform,” Mr Korva said. he said.

“It seems likely that if Celsius survives the setbacks it is currently facing, McKinsky and his team will be involved in legal battles with regulators and customers for years to come.”

When Celsius announces the transaction stop TwitterMany users recorded the answers to express their dissatisfaction.

“It’s ridiculous. Done with Celsius. Let me back off and get out,” one user wrote,

Others have criticized Celsius for advertising that users would have access to their crypto “whenever” and some accused the platform of trying to “drag the rug” and harming investors.

“Trust in Celsius has been lost, which is a very difficult situation to recover in the crypto space,” Mr. Korva said.

Unfortunately, in cases where platforms like Celsius freeze transactions, users have little or no recourse.

Anyone holding money in Celsius can only see the value of their account fluctuate until the platform freezes.

“If you place your digital assets in the custody of a third-party centralized finance service (CEFI) like Celsius, you temporarily lose your rights to access those assets,” Mr. Korva said.

“When a CEFI entity like Celsius goes bankrupt and is forced to liquidate all of the assets held in its custody account, that temporary decline can become permanent.”

Celsius hasn’t yet provided a timeline for when users will be able to transfer and withdraw funds, but the platform will “continue to share information with the community as it becomes available.”

For more crypto news, The Sun explains the rise, fall and resurrection of Luna.

And we broke down the price of popular altcoin Shiba Inu.

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