The cryptocurrency market ended up with another unwanted surprise as Celsius, the crypto lending and trading platform let on that it would with immediate effect halt every withdrawal, swap, and all other account transactions.
Bloomberg announced that the reputed cryptocurrency lender paused the mentioned activities and exacerbated a broader selloff in the market even as traders persisted in questioning the movement in the market.
Customers found the developments first in the mail, marked as vital to the crypto community. Celsius mentioned that the main motive for the extreme stem was the grave condition in the market. It hinted at the liquidity crunch which it said was stopping it from persisting with its normal procedures for withdrawal.
Celsius mentioned that it was forced into this action to put it in a superior spot to honor all withdrawal obligations in the future.
Is A Liquidity Crunch Behind The Massive Celsius Sell-Off?
There has been strong speculation among customers that Celsius made a hash of its assets following the crash of Terra and Luna. The Anchor protocol failure, which depends on the Terra blockchain could have caused the sell-offs to stabilize liquidity.
The platform also un-staked wrapped Bitcoins worth $247M from Aave, transferring to FTX. But there could be more problems in store for the project as Celsius might be forced to sell a significant portion of wagered ETH. Crypto experts fear that selling a significant chunk of stETH could cause the asset to depeg from Ethereum and result in the crash of stETH.
The platform has even now sent FTX 54,749 ETH, which cost around $75M. Celsius has already staked $205M USDC over Aave. Over the weekend, plus 8.2M DAI on the compound. But such amounts are way below the value of the ETH and wBTC tokens. The situation between FTX and the platform is also warming up quite fast.