The Ghosts Of Terra Awake As Celsius Token Crashes By 50% After Firm Pauses Withdrawals

The Ghosts Of Terra Awake As Celsius Token Crashes By 50% Following Withdrawal Pause

Users of the crypto lending platform, Celsius, have been left biting their nails following an announcement that the network has paused withdrawals, swaps, and transfers between customers. This was done in order to “put Celsius in a better position to honor, over time, its withdrawal obligations. In service of that commitment and to adhere to our risk management framework, we have activated a clause in our Terms of Use that will allow for this process to take place.”

The announcement, made in the early hours of June 13, comes in the wake of BTC’s fall to the $24,000 price zone as the entire crypto market wipes over $250 billion in just 7 days.

“We are working with a singular focus: to protect and preserve assets to meet our obligations to customers,” the announcement read in part. 

Recall that rumors of insolvency began to build around the platform in May, prompting Celsius CEO, Alex Mashinsky, to deflect blame for the problems to “shadowy Wall Street opportunists”.

The Celsius (CEL) token has plunged by over 55% in less than 24 hours and currently trades at $0.19.

Reports Of Mismanagement of Funds 

Before the announcement, there have been reports of mismanagement of funds from the project, prompting rumors of a liquidity crisis and looming insolvency. On June 12, it appeared that Celsius was dealing with this crisis by unstaking $247 million worth of Wrapped Bitcoin from Aave and sending it to FTX.

These actions have fueled speculations that all is not well with the firm, as the project has been moving massive amounts of ETH, wrapped Bitcoin, and other crypto-assets. This is in addition to pausing withdrawals and transfers for users.

Users and commentators alike have criticized Celsius over what they believe has been gross mismanagement of its funds following the collapse of the Anchor protocol. Several have gone on to sound the alarm bell, warning that following Terra’s collapse, another crash within a month would be deleterious for the crypto markets.

Several tweets have shown that an unusual movement of tokens from Celsius’s DeFi wallet by the platform began at about 6:00 PM Eastern Time on June 12. The exodus began when Celsius began removing its wrapped Bitcoin (WBTC) from the Aave lending and staking platform which is used to earn interests on deposits. Following a number of transactions, the wrapped Bitcoin, totaling over $247 million, have been moved to the FTX exchange for an undisclosed reason.