Celsius Network Stops All Withdrawal Amidst Liquidity Problems

Recently, the Celcius Network, which is prominent for its lending services, has officially halted its withdrawal services. The network reportedly took the action in the best interest of its users.

However, the action spiked up a massive sell-off of the network’s token, CEL, across all exchanges. Furthermore, the token dropped 45% in price value as it hit $0.20 lows.

Celsius Stopped Withdrawal and Swap Services

Earlier today, Celsius used its official Twitter page to officially announce the sudden news to its users. The news stated that the crypto firm is temporarily suspending its swap, withdrawal, and transfer services. 

The post added that the firm took this step to improve its withdrawal obligations over time. Before the announcement, rumors had it that the network sold staked ETH to fortify its liquidity pool. 

According to the report, Celcius transferred massive quantities of WBTC and ETH to the FTX exchange recently. A total of 50,000 ETH and 3,500 (WBTC) WuBlockchain were recorded in the transaction within 3 hours after the tweet.

Will Celsius Network Crash?

The Celsius Network stated that they may have to sell off more assets to fortify their liquidity pool. In addition, they added that if this happened, CEL would witness massive sellouts across the crypto space.

They continued that they are focused and determined to secure their customers’ assets at all costs. They aim at building a stable liquidity system. 

They also hope to restore normalcy to the withdrawal, swap, and other transaction services soon again. They assured their users that they would create stable liquidity and operations with a secure environment for users’ funds.

Reports showed Celsius’ current case is similar to that of the Terra Network that crashed last month. Terra reportedly attempted to restore normalcy to its liquidity system by selling off its reserved tokens. 

However, things went out of hand which led to Terra’s crash. Now, Celsius is in the exact steps followed by Terra. Interestingly, the network had initially announced its plans for an IPO. 

But with the current situation of the network, it is uncertain if the IPO plans will surface again. Furthermore, the network might face a thorough correction from regulators soon if things don’t get better.

Additionally, the report showed that Celsius is currently in heavy debt. It borrowed USDT and USDC in massive quantities to stabilize its liquidity requirement. 

Not only that, it reportedly has 288,000 ETH staked in an Ethereum version 2.0 contract. The big deal is that ETH is currently down by 8% thereby decreasing the value of funds staked on it.

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