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Celsius Crypto Exchange Pauses All User Activity, Sends $320M to FTX By DailyCoin


Celsius Crypto Exchange Pauses All User Activity, Sends $320M to FTX

The crypto market has been struck with yet another unpleasant surprise as crypto trading and lending platform Celsius announced it would be halting all withdrawals, swaps and other transactions between accounts.

The news first reached customers by email, which was marked as “very important” to the community. Celsius cited “extreme market conditions” as the main reason for the grave decision, and hinted at a lack of liquidity preventing it from continuing its usual withdrawal procedures, saying “we are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations”.

A Liquidity Crisis Leading to a Massive Sell-off?

Speculation is circulating among customers of Celsius that the company mismanaged its digital assets in the wake of the Luna crash. The failure of the Anchor protocol, which runs on the Terra blockchain, may have led to sell-offs as a means of stabilizing liquidity.

Furthermore, Celsius unstaked a massive sum of $247 million worth of Wrapped (wBTC) from Aave and transferred it to the FTX exchange. The project’s problems might not be over just yet though, as Celsius could yet sell a noteworthy portion of staked ETH (stETH). Crypto analysts fear that if a large chunk of Lido Staked Ether (stETH) is indeed sold, it would eventually lead to the asset depegging from , thus resulting in a stETH crash.

At the time of this writing, the Celsius platform has already sent 54,749 Ethereum (ETH) to FTX, worth approximately $75 million USD. Over the weekend, Celsius staked $205 million USDC on Aave, and 8.2 million DAI on Compound. Nonetheless, these amounts are far less than the worth of the removed wBTC and ETH tokens. Further compounding these issues, according to business insiders, the situation between Celsius and FTX is heating up fast.

The Motives are as Clear as Mud

The backlash from the crypto community has caused the network’s native token, Celsius Network (CEL), to drop dramatically over the past 24 hours. CEL saw its price reduced by more than half (54.4%), and is trading at $0.187998 at press time, according to CoinGecko. Moreover, this marks a 71.8% decrease over the last 7 days. In conclusion, it seems unlikely that Celsius will be able to bounce back before a clear explanation and motivation for its recent moves are provided to investors and customers.

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