- Cryptocurrency trading platform Celsius announced on June 12 that it would be pausing all withdrawals, trades, and transfers between accounts.
- Three days after the announcement Alex Mashinsky, founder and CEO of the platform, wrote that they are working on it but did not give more information.
- The firm stated that the reason it decided to suspend its services was to help meet its withdrawal obligations, in addition to “stabilizing liquidity” and “preserving and protecting assets.”
“Better times will come”, says a phrase or “when it gets darker, it’s because it’s going to dawn” says a song, however, to digital assets That doesn’t look like it’s going to happen any time soon, since they are going through an icy wave of price declines and job losses as the ecosystem slowly unravels.
Although, so far in 2022, Bitcoin has seen a drop in its price, the last three months is when the cryptocurrency has seen a loss in value and the last seven days have been the most critical, reaching around the $20 thousand dollars a unit, a price that has not been touched since December 2020.
In addition to the overall market capitalization of the crypto sector taking a nosedive, dipping below $1 trillion for the first time since 2021.
Along with the current collapse in the crypto market, added one more problem to the already battered industry, as the decentralized moneylending firm in the cryptocurrency sector, Celsius, put a new nail in the coffin of cryptocurrencies.
Last Sunday the firm announced to the concern of its users, that would stop withdrawalstrades and transfers of all virtual currencies on its platform, for an unspecified period, citing “extreme market conditions”.
Alex Mashinsky is silent
Since that announcement, no more information had been given about it, leaving users and investors with their souls in a thread without knowing what would happen to their money, until, finally,Alex Mashinsky, founder and executive director of the platform, wrote on his official Twitter account about it, however, his words were not the most encouraging for those who thought that he would give a practical answer to their fears.
mashinsky sHe pointed out on the social network that the company’s team is working “non-stop” on the issue, in addition to asking for the patience and support of customers while the company is going through a difficult time.
Nevertheless, He said nothing about a possible date when the firm will be back in business. Shortly after, Twitter users wrote a series of messages to the company’s CEO, asking him to commit to the safety of customer deposits, but Mashinsky did not respond further.
In the most recent update, the CEO announced that he would cancel his AMA (Ask Me Anything, a question and answer session) to focus on what is happening on the platform.
Celsius in trouble
The firm stated that the reason it decided to suspend its services was to help meet its retirement obligations, in addition to “stabilize liquidity” and “preserve and protect assets”after the digital asset Lido’s Staked Ether (stETH), began to experience irregularities.
The next day, a series of reports appeared indicating that Celsius transferred approximately $320 million worth of assets to the crypto exchange FTX, a couple of hours before the company suspended withdrawals.
To further aggravate the problem, the Texas Securities Board decided to open an investigation against Celsius, in response to its decision to suspend withdrawals.
According to information from the news agency ReutersJoseph Rotunda, current director of the Texas Securities Board’s division of law enforcement, noted that the regulator has begun investigating Celsius, noting that the investigation is a “priority” for the Texas regulator.
“I am very concerned that clients – including many retail investors – may need immediate access to their assets and yet be unable to withdraw them from their account.yes,” he said.
Celsius hires group of lawyers
Due to what happened, Celsius had no choice but to take desperate measures to resolve the situation as soon as possible, which is why the consortium recently decided to hire a group of restructuring lawyers from Akin Gump Strauss Hauer & Feld LLP, in order to get legal advice and get out of the pothole you are in.
As they say, “fishermen win in troubled rivers”, since, in the midst of the chaos, a rival crypto lending platform, called Nexo, saw the opportunity to take advantage of the situation, so it offered to acquire all the qualified assets of Celsius.
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