Crypto Market Rocked Yet Again By Celsius Debacle Just Weeks After Terra Luna Collapse
In what has become a far too common occurrence, another controversial cryptocurrency company is taking drastic steps to fix a broken system.
The latest crisis involves Celsius Network, one of the largest so-called crypto lenders in the industry.
These companies are basically banks for cryptocurrencies. In return for depositing one’s crypto portfolio to the platform, Celsius offers exceptionally high interest rates of up to 17%; the average checking account returns 0.04%.
The company claims it can afford these high-interest rates by offering high-interest loans and beginning its own cryptocurrency mining operations. In what should come as no surprise, these promises turned out to be nothing more than wistful aspirations.
Late Sunday night, Celsius Network (CEL) announced that it would be pausing withdrawals, swaps and transfers on the platform, effectively freezing the assets of its users. The company claims it is doing so to protect itself from “extreme market conditions.” Outside observers believe it’s more likely that the company can no longer fund its obligations due to reduced demand for new investors not providing the funds needed to keep the Ponzi scheme going.
This move by Celsius comes a month after another cryptocurrency company’s collapse sent shockwaves through the industry. In early May, cryptocurrency platform TerraUSD (UST) imploded after its leading stablecoin, TerraUSD, broke free from its peg to the U.S. dollar and plunged from a price of $1 to under a penny. This plunge caused widespread effects throughout the cryptocurrency industry and wiped out hundreds of billions of investor wealth.
.@CelsiusNetwork is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: https://t.co/CvjORUICs2
— Celsius (@CelsiusNetwork) June 13, 2022
Incredibly, the people behind Terra decided to introduce a new stablecoin platform mere weeks after the original platform imploded. The new platform will get the Terra moniker, while the old blockchain will be rebranded as Terra Classic. The company’s associated coins will be LUNA and LUNC, respectively.
Celsius and Terra aren’t the first crypto companies to fizzle out, and they won’t be the last. Investors need to be very careful about which crypto platforms they are using. Otherwise, they can wake up one day and find themselves locked out of their assets. Or, worse, their assets are worthless.
Celsius is currently trading at $0.848, up +34.39% on the day. YTD CEL is down -79.99%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks or cryptocurrencies mentioned in this article.
