Following the recent drastic drop in prices in the cryptocurrency markets, another provider went haywire: the financial platform Celsius announced on Monday that all options for withdrawing money from accounts with the service will be blocked. Swap transactions and transfers between service accounts are also blocked. It wants to “put itself in a better position” to meet its long-term payment obligations, according to the service announcement. This is done “to protect customers” in the face of “extreme market conditions”.
In the crypto scene, fears are already spreading that after the fall of the TerraUSD stablecoin, the next provider, Celsius, could collapse. Celsius is a platform where users can store cryptocurrency on a wallet and earn interest on it. Interest rates depend on the amount and type of deposit: Celsius advertises up to 18% annual interest. The coin deposit is then used for staking or lent to institutional investors who do business with it.
The Celsius token goes on a roller coaster
The stop is all the more surprising since Celsius pointed out in a blog post a week ago that he is well prepared for the difficult market situation. The rumors that the collapse of the Celsius Earth resulted in heavy losses are not true. Celsius soon noticed the instability of this stablecoin and reacted immediately. In addition, there is more than enough liquidity available to meet all obligations.
After Monday’s payment halt, the price of the native Celsius token dropped by around 70% to a low of US $ 0.15. On Tuesday, the pendulum swung to the other side: Celsius is gaining rapidly and has risen to the current level of $ 0.33. However, the Celsius coin has long since moved away from its high of around US $ 6. According to its own information, Celsius recently managed approximately $ 12 billion in credit for more than 1.5 million customers.
Nuri’s “bitcoin earnings accounts” are also blocked
The payment block now also puts Berlin-based start-up Nuri (formerly Bitwala) in trouble: Nuri’s “Bitcoin earnings accounts” are now also subject to a payment block. For these accounts, Nuri promised his customers a return of up to 3% on Bitcoin deposits. For this purpose, the deposited coins were transferred to Celsius via the banking partner Solaris. And now they are stuck.
Nuri stressed in a statement that the revenue will continue to be counted. The new payments in the revenue accounts have been suspended for the time being and are in close consultation with Celsius. Nuri did not say how many customers and what amounts were affected by the stop. A response to a request from heise online is still pending. Nuri boss Kristina Walcker-Mayer told Handelsblatt that only “a fraction” of the nearly 500,000 customers have a Bitcoin income account.
No deposit insurance anywhere
Whatever the size of the customer fraction, if Celsius defaults, the loss will be borne by those customers. In the information on the risks for the Bitcoin income account, Nuri makes it clear that there is no deposit insurance and that the service is not responsible for losses. “Investors bear the entire risk of Celsius Network defaulting,” she said.
In the US, Celsius has also changed the terms for its interest-bearing crypto accounts since April 15. Since then, new money from private investors has no longer been accepted, only professional investors can do it. This was the result of discussions with US financial regulators, Celsius said. However, this did not apply to investors outside the United States. And Nuri went on to offer his Bitcoin income account in partnership with Celsius for private investors.
Crypto Valley has slowed down slightly
However, the descent of Bitcoin and many other cryptocurrencies has slowed slightly again. On Tuesday morning, the price of the largest digital currency by market value dropped towards the $ 20,000 mark. The minimum on the Bitfinex trading platform was around $ 20,860. This is the lowest level in a year and a half. Per hour, the price recovered slightly to around US $ 22,000. The record was reached in November at around $ 69,000.
Number two on the market, Ether, has dropped as low as $ 1078, the lowest level since the beginning of 2021. The price is currently around $ 1200. According to the Coinmarketcap portal, the value of all approximately 19,800 digital currencies is currently approximately USD 940 billion. Six months ago, the market capitalization was about three times higher. This shows how much pressure the market is under. Concerns about inflation and interest rates are the main reasons for the drop in prices. Due to the devaluation of the currency, many central banks are tightening their monetary policy.