Celsius halts withdrawals as pressure mounts on crypto lending platform

Celsius Network has halted withdrawals due to “extreme market conditions,” as the $12 billion digital asset lending platform faces increasing strain amid a broad pullback across the cryptocurrency market.

The group has faced increasing pressure in recent weeks as investors flee the market for crypto yield products, where traders lend out their tokens in exchange for high fixed returns.

Celsius said on Monday that it was "pausing all withdrawals, swaps and transfers between accounts" to put it "in a better position to meet its withdrawal obligations over time."

Founded in 2017, the company is one of the largest players in the crypto industry. Last year, the company raised $400 million in an equity financing round led by Caisse de dépôt et placement du Québec, Canada's second-largest pension fund, and WestCap, the fund founded by former Airbnb and Blackstone executive Laurence Tosi.

Celsius' move further weakened market sentiment for lending more established digital tokens as collateral to support new cryptocurrency projects. Last month, the Terra and Luna tokens – which formed the basis of another popular yield platform – collapsed within days.

The value of assets deposited on Celsius' platform shrank from more than $24 billion at the end of December to less than $12 billion as of May 17.

Celsius, which has offices in the US, UK and Lithuania, said the freeze on customers' ability to withdraw their funds was "made for the benefit of our entire community, to stabilize liquidity and operations while we take measures to preserve and protect assets."

“Celsius has valuable assets and we are working diligently to meet our commitments,” the group wrote in a Medium post announcing the news.

The recent troubles at Celsius dealt a major blow to the broader crypto market. Ether, seen as an indicator of sentiment for digital asset projects that offer investors high returns, lost a fifth of its value to trade at $1,321, according to Refinitiv data. Bitcoin, the world's most actively traded cryptocurrency, fell 12 percent to just over $25,000, its lowest level since December 2020.

The group's own coin, known by the ticker CEL, has lost half its value in the last 24 hours, data from CryptoCompare shows.

The platform had faced questions over the past week from customers saying they were unable to make withdrawals. CEO Alex Mashinsky called on critics over the weekend to “find even one person who has a problem with the resignation.”

Additional reporting by William Langley in Hong Kong