Bitcoin slide after crypto lender disables Celsius network withdrawals

LONDON, June 13 (Reuters) – Bitcoin plunged on Monday after the Celsius Network, America’s leading cryptocurrency lender, cited “extreme” conditions and blocked withdrawals and transfers, the latest sign of a financial market crash in the cryptosphere.

The Celsius move triggered a fall across cryptocurrencies, with their value falling below $ 1 trillion on Monday for the first time since January 2021, with the largest token bitcoin falling 12%.

Following Celsius’ announcement, Bitcoin touched an 18-month low of $ 23,300. The No.2 token ether was down 18% to $ 1,176, the lowest level since January 2021.

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Crypto markets have been declining over the past few weeks as rising interest rates and inflation have prompted investors to avoid risky assets in the financial markets.

Markets extended selling on Monday after US inflation data on Friday showed the biggest price rise since 1981, prompting investors to raise their challenge on the Federal Reserve rate hike. read more

Cryptocurrencies were also shaken by the fall of the TeroSD and Luna tokens in May. read more

Bitcoin, which increased in 2020 and 2021, has fallen by 50% so far this year.

Joseph Edwards, head of financial strategy at financial management firm SolRice Finance, said: “This is still an embarrassing moment, and there is some risk of infection around crypto.

Crypto credit

Celsius offers interest-bearing products to customers who deposit cryptocurrencies on its platform. It then lends cryptocurrencies to earn income.

Celsius said on its website on Monday that customers who convert their crypto to its site can earn up to 18.6% per annum.

The website urges customers to “earn more. Borrow less”.

In a blog post, the company said it had disabled cash withdrawals and transactions between accounts “in order to stabilize cash flow and operations while taking action to protect and secure assets.”

“Over time, we are taking this step today to put Celsius in a better position to respect its withdrawal obligations,” the New Jersey-based company said.

Celsius’s token, Crypto lenders and lenders can earn or pay interest on its site, based on CoinGecko data which has fallen about 97% from $ 7 to 20 cents in the last 12 months.

Chelsea CEO Alex Mashinski and Reuters did not immediately respond to requests for comment.

‘Gray Area’

Increased interest in crypto lending has led to concerns among regulators, especially in the United States, about investor securities and the legitimate risks of unregulated credit products. read more

Matthew Nyman of CMS Law Firm said Celsius and Crypto, which provide services such as banks, were in the “gray area” of regulation. “They are not subject to any clear regulation, it is necessary to disclose their assets.”

Celsius raised $ 750 million last year from investors, including Caisse de Dépôt et Placement du Québec, Canada’s second largest pension fund. Celsius was then valued at $ 3.25 billion.

As of May 17, Celsius had assets of $ 11.8 billion, and its website had halved since October, operating a total of $ 8.2 billion in debt.

Mashinsky, the CEO, said in October last year that Celsius had assets of more than $ 25 billion.

Competitor Crypto Lender Nexus said Monday it offered to buy Celsius’ outstanding assets.

“We approached Celsius on Sunday morning to discuss the acquisition of its network credit portfolio. So far, Celsius has chosen not to get involved,” said Nexo co-founder Antoni Trenchev.

Celsius did not immediately respond to a request for comment on Nexo’s offer.

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Report by Tom Wilson and Elizabeth Howcraft in London; Additional report by Abhinaya Vijayaragavan in Bangalore and Alun John in Hong Kong; Editing by Bradley Beret and Jane Merriman

Our standards: Thomson Reuters Trust Principles.

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