Cryptocurrency platform Celsius halts withdrawals

Israeli-US cryptocurrency platform Celsius has announced that it is suspending all withdrawals, swaps and transfers from the accounts of its investors. In its announcement, Celsius said that it was taking this action for the benefit of the community, and that it would continue to provide information to its customers. The announcement comes after its currency has fallen 95% over the past year.

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Celsius, which was founded by Israeli entrepreneurs Daniel Leon and Nuke Goldstein and CEO Alexmasinsky and is mainly engaged in banking operations. Customers can deposit cryptocurrency with Celsius for interest and the company also extends loans against cryptocurrency deposits. Celsius has been offering high returns of 15% annually on average on deposits, in a practice called “striking,” which has come in form major criticism since the collapse of the previously stable cryptocurrency Luna.

Celsius has grown rapidly in recent years but the upheaval it is undergoing can be clearly seen from its own website. According to the website, at the end of March the company was managing assets worth $19.1 billion for 1.6 million customers. But the website now says that it currently manages assets of 151.53 bitcoin, worth about $5 billion. Last October, Celsius raised $400 million at a company valuation of $3 billion. Celsius does not possess a license to operate in Israel, and in practice its core activities are banking activities and not at all in the realm of the Supervisor of the Capital Market, which examines issuing licenses for cryptocurrency activities in Israel.

In addition to licensing problems, Celsius is coping with other challenges such as security challenges, after a cybersecurity breach last December led to the loss of $54 million of its assets.

Celsius’s own CEL cryptocurrency fell as low as $0.088 after the announcement that it was halting withdrawals but has recovered somewhat to $0.3.

Celsius said, “Due to extreme market conditions, we have been forced to announce the complete halt of all withdrawals and SWAP transactions in customer accounts.The aim of this measures is to allow the company to stabilize liquidity and operations while we take steps to preserve and protect assets.”

Published by Globes, Israel business news – en.globes.co.il – on June 13, 2022.

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