Celsius Network Pauses User Withdrawals Leading to A Major Market Crash

The border cryptocurrency market has entered a strong correction last week further fueled by the Celsius Network earlier today. Bitcoin and all other cryptocurrencies have registered double-digit losses in the last 24-hours. The entire cryptocurrency market has slipped under $1 trillion for the first time in 18 months.

Crypto staking and lending platform Celsius Network has been reportedly facing a major liquidity crisis. Earlier today, June 13, Celsius announced that it shall be pausing withdrawals, swaps, and transfers between accounts.

The announcement notes: “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets”.

The real trouble started with the de-pegging of the staked Ether (stETH) from the actual ETH price. As a result of this, the liquidations on the platform shot up significantly. As per reports, Celsius is trying to meet this liquidity demand by moving their ETH to the market and liquidating them. As per Wu Blockchain: Celsius has transferred about 104,000 ETH to FTX in the past three days.

This could lead to further cascade of liquidations driving ETH prices even lower. As of press time, ETH is trading 16% down at a price of $1222. Just on the weekly chart, the ETH price is down by more than 35%.

Celsius users have been criticizing the platform for mismanaging their funds and failing to provide better transparency in this regard. Following the recent turn of events, CEL, the native cryptocurrency of the Celsius Network has also corrected more than 50% and is currently trading under $0.20.

Well, there’s still no clear intention behind Celsius Network moving these massive amounts of crypto to the FTX exchange. One obvious guess is that it could sell these tokens to substitute for the liquidity demand. The other option is that it plans to stake these tokens to generate yield.

As the Celsius Network goes through this tumultuous times, competing platform Next has reached out to acquire Celsius’ qualifying assets. It said: “Nexo is in а solid liquidity and equity position to readily acquire any remaining qualifying assets of Celsius, mainly their collateralized loan portfolio. We are putting together an offer to Celsius to that accord and will communicate it publicly”.

Nexo also said that it had already approached Celsius on Sunday, however, they refused the offer.