by Tom Wilson, Alun John and Abinaya V
LONDON (Reuters) – Cryptocurrency lending platform Celsius Network announced a freeze on withdrawals due to “extreme market conditions”, a move that has helped to escalate those same tensions and sent the price of bitcoin plummeting to as low as its lowest level for nearly 18 months.
Celsius Network promises high interest rates to customers who deposit their cryptocurrency with it and lends cryptocurrency to other “crypto” market companies or investors in exchange for commissions. The company raised in November 750 million dollars (716 million euros) from investors including the second Canadian pension fund.
On her blog, she explained that she froze withdrawals and transfers between accounts “in order to stabilize liquidity and operations while we take measures to preserve and protect assets”.
“We work with one priority: to protect and preserve assets to meet our obligations to customers,” she added.
Cryptocurrency lending has seen steady growth, which has caught the attention of financial regulators, particularly in the United States. In mid-May, Celsius Network posted $8.2 billion in loans and $11.8 billion in assets according to its website.
At the same time, the crypto-asset markets have been going through a new zone of severe turbulence for several months now, linked to the disengagement of many investors from assets deemed the most risky in the context of high inflation and the rapid rise in interest rates, a trend that also affects stocks.
The fall of the stablecoin terraUSD last month amplified this trend.
Bitcoin, the best-known crypto-asset, deepened its decline after Celsius’s announcement and at 09:25 GMT, it lost 16.77% to $24,295.36, the lowest since December 2020. Ether, gave up 13, 78% at the same time to $1,235.47, its lowest level since January 2021.
The Celsius Network website still posted ads on Monday promising yields of up to 18.6%. “Earn high, borrow low, change the world”, assured its slogan.
On Twitter, rival platform Nexo said it had offered to help Celsius but was turned down, saying it was working on a possible asset takeover bid.
Celsius chief executive Alex Mashinsky did not immediately respond to a request for comment.
(Report Tom Wilson in London, Abinaya Vijayaraghavan in Bangalore and Alun John in Hong Kong, French version Marc Angrand)