Following a severe collapse in cryptocurrency markets, a prominent American cryptocurrency lender with deep links to Israel has prohibited clients from making withdrawals from their accounts.
The Celsius Network, a New Jersey-based ‘crypto bank’ founded in 2017, enables consumers to deposit and borrow cryptocurrencies. Celsius advertised rates as high as 19 percent before to last Sunday’s news that consumers would be temporarily unable to withdraw funds from their accounts.
Despite the freeze, the business promised to “meet withdrawal commitments over time.” However, no timetable was provided for when consumers will be permitted full access to their accounts. Celsius has 1.7 million consumers and assets worth more than $10 billion.
Celsius was founded by Alex Mashinsky, a Soviet-born émigré to Israel, and has over 100 workers in Celsius’ top Israeli executives include cofounders Daniel Leon, Celsius’ CSO, and Nuke Goldstein, the company’s CTO, in addition to Mashinsky, the company’s CEO. Yaron Shalem served as CFO until mid-2021.
Shalem was arrested in Israel in November as part of a large sweep of alleged crypto scam artists accused of defrauding investors worldwide. For the first time since Celsius’ declaration last Sunday, Mashinsky spoke out publicly on Wednesday, tweeting that the business is “working non-stop” to restore regular service.
“The Celsius Network crew is operating around the clock. We’re listening to your concerns and grateful to have heard from so many of you. Seeing you all come together is proof that our community is the strongest in the world. This is a challenging time for us; your patience and support mean everything.”
Crypto markets have taken a beating in recent months, with the ostensibly secure “stablecoin” currency Terra crumbling last month, wiping out $45 billion in a single week. Bitcoin, the most popular cryptocurrency, fell 9 percent to less than $19,000 on Saturday, its lowest value since November 2020 and well below its top of $69,000. Ethereum, another popular cryptocurrency that has been declining in recent weeks, fell similarly on Saturday.
Cryptocurrencies, which skyrocketed in the aftermath of the SARS-CoV-2 outbreak on worries of impending inflation, have fallen in part owing to signs of tighter monetary policies from the US Federal Reserve and other central banks.
The Federal Reserve launched a “unconditional” war on inflation on Friday, with Atlanta branch President Raphael Bostic – a famous inflation dove – promising to do “whatever it takes” to limit price increases.
With the statement, the Federal Reserve is now likely to raise interest rates to 3.4 percent for the benchmark lending rate over the next six months.