The official twitter account of CelsiusNetwork posted the following message:
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”
By doing so, the DeFi protocol that calls itself home for more than 1.7 million crypto investors, is taking the necessary action in order to stabilize its liquidity and operations.
Celsius users trapped
By the halting of all transfers and deposits, users cannot repay their loans, leading to margin calls across the board. With prices dropping, Celsius liquidates their users’ collateral even though they can pay off their loans. Losing the trust of investors and scarring the image of DeFi.
More problems ahead?
If prices keep dropping, Celsius can be in for more troubles. There are more than 17k wrapped Bitcoins (worth $398.948.634) that are ready to be liquidated when the price falls to $18,4/$BTC. From there the automatic auction process will be initiated and a very large position will be forcefully sold out of the hands of Celsius.
Some say Celsius is already insolvent and can’t afford to pay back its loans so instead of paying back it is desperately topping up collateral with what little it has. Hoping the market reverses to save them. A liquidity crisis could be happening and thus possible issues in paying everyone out who deposited on the platform. This could impact the whole cryptocurrency industry.
What do you think? Let us know in our community…
