Celsius has announced that it has paused all withdrawals on its platform from the early hours of Monday. The lending platform which is used by more than 1.7 million people in the crypto space made this announcement following the recent bloodbath. Celsius’ decision to do this has naturally been received badly by its user base who now find themselves unable to withdraw their funds and has given rise to speculations regarding how much liquidity it possesses.
As per an email that was sent out to users, Celsius admitted that current market conditions had played a large role in its decision to freeze withdrawals. Interestingly, the platform had also paused all trading activities, meaning that the whole lending platform is currently on hold. Users of Celsius cannot do anything presently other than watch and hope this freeze is lifted soon.
The lending platform added that it was working on ways to restore withdrawals, swaps, and transfers for its users. However, there is no timeframe in mind for how long this might take and if Celsius will be able to pay back its users.
Naturally, the crypto community has not responded positively to such news. In times such as these when there is rampant uncertainty in the market, being unable to withdraw funds from a lending protocol is destroying trust in the market.
Users took to replying en masse under the announcement tweet made by Celsius to voice their displeasure, whereas some have resorted to full-blown panic and begging the platform to open withdrawals.
The implications of a liquidity crisis for a company such as Celsius are massive. Canadian’s second-largest pension fund, CDPQ, had invested $400 million into the company back in October of 2021. A collapse of the company would jeopardize the retirement plans of thousands of Canadians who have their funds with the pension fund.
Crypto company Nexo, is said to be gearing up to offer Celsius a buyout plan. But this plan will only cover some of the lending protocol’s assets. It is said the buyout plan will only be available until the 20th of June, a week from now.
As of the time of writing, the price of the CEL token is down more than 50% in the last 24 hours. This is the result of the confidence level in Celsius falling more than 90% and users pulling their assets to avoid more losses.