celsius network logo
Crypto News

Celsius CEO “Loses Voice” Two Days Before Halting All Withdrawals

The crypto-lending firm Celsius, which offers high-yield returns on user deposits, appears to be the latest to falter in the face of tightening financial conditions. It also came barely one month after the Terra-Luna stablecoin network collapsed.


Celsius Network is a blockchain-based lending platform accessible through a free mobile app. Celsius Network is a big, venture capital-backed cryptocurrency company valued at $4.1 billion after its most recent Series B funding round in November 2021.

According to the Federal Deposit Insurance Corporation, traditional banks in the United States currently give a 0.07 percent annual income on savings accounts. In comparison, Celsius offers consumers a 17 percent yearly yield on deposits (FDIC).

Celsius Not Regulated

Crypto lenders such as Celsius are not regulated the same way traditional banks are, and they lack essential safeguards such as deposit insurance. This, of course, has been a part of US banking regulation strategy for a long time.

According to the network, Celsius’s loans are collateralized in Bitcoin, although not all are. Furthermore, there is no guarantee that it will be able to pay out consumers in the event of a surge in withdrawals, especially given that the Bitcoin price has dropped 40% since late last year.

This exposed some of Celsius’s issues, demonstrating how some of their positions are not properly managed.

Celsius Network Halts Withdrawals, Causing More Panic

The biggest red flag that things were seriously wrong with Celsius came when they abruptly suspended all withdrawals and transfers, thereby shutting out all of their customers.

Celsius claims to be operating in the best interests of the community and wants to restore withdrawals as quickly as possible, according to their official memo.

Also, they already notified their community over the past 24 hours ago that they’d not be holding any Twitter Space for a while to attend to the issue at hand. This, however, doesn’t sound good as people want transparency and communication.

The value of blockchain-based technology is in the fact that it is entirely open, and it appears that the Celsius community is losing faith in the network. 

Celsius CEO Mashinsky has been silent over the last six days and dropped out of the AMA (Ask Mashinsky Anything) event. That was before halting withdrawals, claiming he had “lost his voice.”

The Celsius Network Crisis Is Bad For The Entire Crypto Industry

The current scenario with Celsius poses a short-term but long-term threat to the entire cryptocurrency sector.

In the short term, Celsius has a large amount of cryptocurrency. As of the time of writing, its website still claims to have $11 billion in assets on its platform. Celsius is one of the industry’s top lenders, and if they begin liquidating assets, the markets would be substantially affected.

Regulators Finally Having More Opportunities

When the Terra ecosystem experienced its crisis, we saw how regulators worldwide began giving warnings and constructing punitive rules to safeguard investors from similar events in the future.

Regulators will seize any opportunity to examine the business more closely and have the perfect pretext to do so, which is retail investor protection.

Every crisis in cryptocurrency which causes investors to incur massive losses is yet another excuse for regulators to bring up in the next meeting to regulate crypto further. It’s in the best interest of the crypto industry to prevent such crises from happening in the first place. It will help cryptocurrency flourish and prevent the need for hardcore regulation that will stifle development and hinder progress.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency.

Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, and Metaverse news!

Leave a Comment

Your email address will not be published. Required fields are marked *