Celsius Pauses Withdrawals - Massive Red Flag

[james.hendrickson]

All

Cryptolending firm Celsius has paused all withdrawals, swaps and transfers. Their stated reason is market conditions.

The announcement came via Twitter:

As well as via an announcement to their customers in the form of an email:

Celsius has also received cease and desist letters from at least four state regulators, as there are rumors flying around on Twitter that the company transferred large sums out of their platform prior to making this announcement. I don't put a lot of stock in the rumors because Twitter is full of people with poor critical thinking skills, but the news is certainly a red flag for the Celsius as well as for the whole crypto sector.

[kork13]

They were probably over-leveraged in a variety of crypto currencies that have now floundered in value, drying up their ability to cover their bets. Fairly typical, and it sounds like they're circling the drain because of it. Unless Bitcoin & others have a sudden spike in value, they will probably cease operations entirely, and the "holders" of crypto through their service will probably lose everything. I assume this is another case (as discussed last month) where the customers don't actually hold the keys to their crypto?

There are reasons that the banking/lending/investing industries are regulated, and yet the crypto space has so-far evaded most of that scrutiny.

[james.hendrickson]

They were probably over-leveraged in a variety of crypto currencies that have now floundered in value, drying up their ability to cover their bets. Fairly typical, and it sounds like they're circling the drain because of it. Unless Bitcoin & others have a sudden spike in value, they will probably cease operations entirely, and the "holders" of crypto through their service will probably lose everything. I assume this is another case (as discussed last month) where the customers don't actually hold the keys to their crypto?

There are reasons that the banking/lending/investing industries are regulated, and yet the crypto space has so-far evaded most of that scrutiny.

Kork, I have no evidence for this...but part of me wonders if it wasn't a pyramid scheme.

In any event it is another huge blow for the crypto sector.

[kork13]

Kork, I have no evidence for this...but part of me wonders if it wasn't a pyramid scheme.

In any event it is another huge blow for the crypto sector.

Potentially, yeah, it does kinda have that look, even if unfounded. As I said, crypto stuff is still largely unregulated, so there's a ton of risk on both an individual & business in operating with it.

[disneysteve]

crypto stuff is still largely unregulated, so there's a ton of risk on both an individual & business in operating with it.

I don’t think crypto will really catch on and be widely accepted until this changes. It needs to be regulated and insured the same way that traditional financial instruments are. I’m not putting a penny into an “investment” that has no government or institution standing behind it. Without protections in
place like FDIC or SIPC and appropriate oversight, most people don’t want anything to do with it.

[james.hendrickson]

I don’t think crypto will really catch on and be widely accepted until this changes. It needs to be regulated and insured the same way that traditional financial instruments are. I’m not putting a penny into an “investment” that has no government or institution standing behind it. Without protections in
place like FDIC or SIPC and appropriate oversight, most people don’t want anything to do with it.

Disneysteve, I think a LOT of people are probably in agreement with that perspective right now. Celsius had 1.7 million account holders. Thats a lot of people who are basically jacked. Its not clear when, if ever, they'll get their money out.

[QuarterMillionMan]

Makes me worry about Robinhood & Coinbase where I have about $5000 at each in bitcoin. I've completed transferring all my bitcoin out of Cash App onto Ledger but it took time since they only allowed transfers of $2500 a day and $5000 a week maximum where I had about $12,000 so it took a couple of weeks. I need to work on my remaining bitcoin at Coinbase & Robinhood transfers but these things takes time with their maximums allowable.