Celsius founder and CEO Alex Maszynski, while appearing in a promotional video for Celsius, uploaded to YouTube. Screenshot: Celsius / YouTube
The Celsius crypto network has halted all trade, including withdrawals, according to a company press release issued overnight. The unusual move comes when major cryptocurrencies fell over the weekend, and there are serious questions about whether Celsius will ever allow consumers to withdraw their money thanks to a rather slippery language in terms of service.
“Due to extreme market conditions, today we announce that Celsius is pausing all withdrawals, swaps and transfers between accounts. We are taking this action today to put Celsius in a better position to meet its withdrawal obligations over time, “the company said in a statement to Medium.
“Action in the interest of our community is our top priority. In the service of this commitment and in order to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow this process to take place. “Celsius has valuable assets and we are working hard to meet our obligations,” the statement continued.
Celsius, which claims to have 1.7 million users, allows people to trade major cryptocurrencies such as bitcoin (down 13.2% in the last 24 hours) and ethereum (down 17%), while promising incredibly high returns for the people who held (HODLing, in the language of the community) with the service.
But what are these “terms of use” that Celsius refers to? On the one hand, these terms of use allow Celsius to stop all trade, as they have already done. They also explicitly say that if Celsius goes bankrupt, you may never get access to your money again, something American consumers in traditional banks don’t have to worry about thanks to the FDIC.
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From the Celsius Website Terms of Use:
In the event that Celsius becomes insolvent, goes into liquidation or is otherwise unable to repay its obligations, all Eligible Digital Assets used in the Earn Service or as collateral for the Loan Service may not be recoverable and you may not have no legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under all applicable laws.
Strangely, Celsius claims that consumers will still “accumulate rewards” while everything else is on hold – which probably means that consumers will earn these absurdly high interest rates on counterfeit money on the Internet. But it is not clear what good interest rates could be if Celsius cannot restore operations.
“We are taking this necessary action for the benefit of our entire community to stabilize liquidity and operations as we take steps to preserve and protect assets. In addition, customers will continue to earn rewards during the break in line with our commitment to our customers, ”said Celsius.
These “awards” and absurdly high interest rates sounded pretty good, according to a Celsius promotional video uploaded to YouTube in April entitled “Why Choose Celsius?”
When can Celsius users expect to have access to their money? The company seemed to expect people to be angry. And they still do not make any promises about the timeline.
“We understand that this news is difficult, but we believe that our decision to pause withdrawals, exchanges and transfers between accounts is the most responsible action we can take to protect our community. We work with a single focus: to protect and preserve assets in order to fulfill our obligations to customers. Our ultimate goal is to stabilize liquidity and recover withdrawals, swaps and transfers between accounts as quickly as possible. There is a lot of work ahead, as we are considering different options, this process will take time and there may be delays, “said Celsius.
Do you catch all this? There may be delays.
For his part, Celsius founder and CEO Alex Maszynski has been silent on social media for the past few hours since the draw was announced. But as early as Saturday night, Mashinsky accused people of questioning Celsius’ liquidity in the spread of FUD, an acronym in the crypto world that means “fear, uncertainty and doubt.”
Mashinsky did not respond immediately to an email from Gizmodo early Monday morning.
Accusing someone of spreading FUD is one of the biggest insults in the crypto enthusiast community, but FUD doesn’t seem to be spreading at the moment. It was old-fashioned, healthy skepticism about cryptocurrencies, a way of making money that seems to work more like a pyramid scheme than a sound financial system.
The Celsius suspension, at least temporarily, is not the first major implosion in recent weeks. Terra and its cryptocurrency Luna melted when her stable coin entered the spiral of death in just a few short days. What did Luna’s founder, Do Kuon, do after losing millions of people? He launched a new coin called Luna 2.0.
You almost have to respect the audacity. almost.
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