Binance on Monday stopped withdrawing bitcoins for several hours after crypto lender Celsius also blocked customers from withdrawing funds from its platform, citing “extreme market conditions” as digital assets fell in price.
Bitcoin, ether and other major tokens have fluctuated in recent weeks as inflation has risen and major central banks have signaled a sharp decline in incentives. But they fell sharply again on Monday amid growing signs that the infrastructure behind the digital asset market is squeaking under pressure. Binance blamed a “stuck transaction” for stopping it.
Bitcoin, the world’s most actively traded cryptocurrency, fell nearly 20 percent on Friday to below $ 24,000, its lowest level since December 2020, according to CryptoCompare. Meanwhile, the value of the broader crypto market fell from a peak of $ 3.2 trillion in November to about $ 1 trillion on Monday.
Celsius is one of the largest players in the digital profitability market, giving consumers the opportunity to give their tokens as collateral for other crypto projects. In exchange for borrowing their tokens, traders managed to earn an annual return of as much as 17 percent.
Mood for these high-risk projects has cooled sharply after terra and luna tokens – which were the basis of another popular platform for profitability – collapsed in a matter of days last month. The value of assets deposited in the Celsius platform fell to less than $ 12 billion on May 17 from more than $ 24 billion at the end of December.
Ether, considered a proxy for digital asset projects that offer high returns to investors, has fallen nearly 30 percent since Friday, leaving it two-thirds in dollar terms this year to trade at $ 1,195.
Sales on Monday also ricocheted off shares of crypto-focused companies. MicroStrategy, a technology company that invests heavily in bitcoin, lost a quarter of its value at the start of Wall Street trading, while Nasdaq-listed cryptocurrency Coinbase fell 16 percent.
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Last year, Celsius raised $ 400 million in a private equity round led by Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, and WestCap, a fund set up by former Airbnb and Blackstone CEO Lawrence Tosi.
In a statement, the CDPQ said it was “monitoring the situation closely”.
“In an environment of general market downturn (stock markets and bonds – for the first time in 50 years), investors are reducing their risk in all asset classes,” the report said.
“In this context, Celsius has been affected by very difficult markets in recent weeks, in particular the large volume of customer withdrawals. Celsius is taking proactive action to fulfill its obligations to its customers (the Celsius community) and to fulfill its obligations to its customers to date. “
WestCap did not immediately respond to a request for comment on their investment.
This fundraiser came even when US regulators said they were inspecting the industry. Authorities in Texas and New Jersey say Celsius’ profitable accounts are unregistered offers of securities.
Stopping Celsius from withdrawing early Monday was also a reversal after spending several days disproving allegations that customers could not withdraw. CEO Alex Maszynski challenged critics over the weekend to find “even one person who has a problem with retirement.”
Celsius, which has offices in the United States, the United Kingdom and Lithuania, said the buyout freeze was done “for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect assets.”
The group’s own coin, known as the CEL ticker, has lost half its value in the last 24 hours, according to CryptoCompare.
Additional reports by Josephine Cumbo
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