Controversial crypto lender Celsius blocks all withdrawals, transfers, swaps citing “extreme market conditions.”

In a “Memo to the Celsius Community,” issued today, crypto lending platform Celsius, which has lent out more than $8 billion to clients, wrote: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.” (CNBC)

The action by the lender reportedly marred sentiment in the crypto market. Bitcoin, the leading crypto, crashed 13.17% to $23,662, while ethereum was down nearly 15% to $1,231.02, at the time of writing. Cryptos were already trending soft before the announcement, which set off a landslide.

“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. Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers,” said the announcement from the crypto platform.

The blockchain-based, fee-free platform offers instant low-cost loans accessible via a web and mobile app to borrowers, as well as a compounding yield service for investors.

Celsius, founded by CEO Alex Mashinsky, raised $400 million in a round led by WestCap, a growth equity firm, and Caisse de dépôt et placement du Québec (CDPQ), the Canadian pension fund, in October 2021 at a valuation exceeding $3 billion.

As on October 8, 2021, the firm had assets under management of over $25 billion. This has now declined to about $12 billion as of May.

The sharp fall in AUM, as well as the 97% plunge in the value of cel, the Celsius token, have raised worries around the firm’s solvency.

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