• DeFi giant Celsius has announced that it has paused withdrawals, swaps, and transfers until further notice.
• Just before the announcement, the company refuted claims of such happenings but still moved over $320M to FTX.

Citing “extreme market conditions,” crypto lending colossus Celsius Network has paused all withdrawals, swaps, and transfers on its platform.

In a June 12 announcement, the DeFi platform said it was working to restore its “withdrawal obligations” and “stabilize liquidity.”

Just a day before Celsius’ announcement, Twitter user @mdudas said there were rumors about locked accounts on the platform. In a now-deleted tweet, the project’s founder Alex Mashinsky called out the user for “FUD and misinformation.”

On the same day, the firm unstaked $247 million worth of Wrapped Bitcoin (WBTC) and AAVE  to FTX. Later that day, Celsius again sent 54,749 Ethereum (ETH) tokens (worth $74.5 million) to the same exchange. In total, the company moved about $320 million as it paused user withdrawals.

Celsius halts withdrawals, CEL down 50%

Previously, Celsius has been questioned over the sustainability of its relatively high yields (up to 30 percent weekly returns). Additionally, the company’s assets value was cut in half from $24 billion in December to $12 billion in May. 

Still, the company maintained that it “has the reserves (and more than enough ETH) to meet obligations, as dictated by our comprehensive liquidity risk management framework.” Celsius also noted that it had exited Terra early enough to prevent disastrous liquidations. The company, however, still had $54 million in losses from the $120M BadgerDAO hack of December last year.

With the Sunday communication to its 1.7 million users, CEL fell 70 percent in the hour following the announcement. The token now trades at $0.188, having shaved off 49.5 percent value in the last 24hours. CEL is also over 90 percent down from $3 in early April. 

Trouble on DeFi platform

This is not the first time doubt has been cast over the operations within the Celsius network. Last year, one crypto enthusiast published a newsletter calling the company “a massive Ponzi scheme.” Celsius was also involved in a million-dollar debt with USDT issuer Tether, claims which the latter refused. 

Even more, the company has found itself under investigations or cease-and-desist orders in New Jersey, Texas, and Alabama. Its former CFO was also arrested in November over allegations of money laundering, fraud, and sexual assault, all from his previous job.

Celsius now says the fixation “process will take time, and there may be delays.” The platform, however, notes that users will continue to accrue rewards as they did before the halt.

In an interview with Time Magazine last month, Vitalik Buterin warned that “crypto itself has a lot of dystopian potential if implemented wrong.” Additionally, the Ethereum co-founder has previously said bearish crypto periods usually ‘pluck out’ unsustainable crypto projects.