Celsius Network, the cryptocurrency lender that rattled markets by suspending withdrawals last week, has warned that it will “take time” to normalise its operations, as companies across the sector face mounting financial pressure from a sell-off in digital assets.
The crypto lending company’s warning came after a series of shocks to digital asset markets have dragged down prices. The price of bitcoin, the largest cryptocurrency, fell below $20,000 over the weekend for the first time since November 2020.
Bitcoin was down 3.6 per cent against the dollar in Asia trading on Monday at $19,864, reversing an earlier rally that had pushed it back above the $20,000 mark.
The drop for the most actively traded digital currency has raised concerns over forced liquidations of large leveraged bets in crypto markets, which could spur further sales and intensify a credit crunch that has already triggered tumult at other crypto lenders.
“As has been a priority since our company’s inception, we maintain an open dialogue with regulators and officials,” Celsius wrote in a blog post on Monday. The lender added that it was pausing social media activities on Twitter and Reddit, which it had been using to maintain contact with customers.
“We plan to continue working with regulators and officials regarding this pause and our company’s determination to find a resolution,” it said, without providing further detail.
The crypto chaos began when stablecoin TerraUSD, which was used to facilitate trading through its link to the US dollar, failed to maintain its dollar peg last month, causing the peg of its larger stablecoin peer Tether to wobble.
The instability quickly spread to another stablecoin and its associated cryptocurrency, luna, which is a key player in decentralised finance, a sector of the industry that seeks to do away with centralised intermediaries such as banks.
Pressure from the broad sell-off in cryptocurrencies has continued to grow. On Friday, Hong Kong-based crypto lender Babel Finance paused withdrawals and redemptions, citing “unusual liquidity pressures”, while Singapore-based crypto hedge fund Three Arrows failed to meet margin calls from lenders.
On Monday, another Hong Kong-based crypto exchange Hoo announced a halt on transactions after customer withdrawals became so great that they risked exhausting the company’s available funds.
Hoo said in a blog post that it was “trying to reconfigure medium- and long-term assets in an orderly and reasonable manner” to facilitate withdrawals, which it said would resume within 72 hours.
Additional reporting by William Langley in Hong Kong