Celsius Network, the cryptocurrency lender that shook markets by suspending withdrawals last week, has warned it will “take time” to normalize its operations as companies across the industry face mounting financial pressure from a digital sell-off assets are exposed.
The crypto lending company’s warning came after a series of shocks in digital asset markets dragged prices lower. The price of Bitcoin, the largest cryptocurrency, fell below $20,000 for the first time since November 2020 over the weekend.
Bitcoin fell 3.6 percent against the dollar in Asian trading on Monday to $19,864, reversing an earlier rally that had propelled it back above $20,000.
The decline in the most actively traded digital currency has raised concerns about forced liquidations of large leveraged bets in the crypto markets, which could spur further selling and amplify a credit crunch that has already caused turmoil among 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 Monday. The lender added that it is pausing social media activity on Twitter and Reddit, which it has been using to keep in touch 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 giving further details.
The crypto chaos began when stablecoin TerraUSD, which has been used to facilitate trading through its link to the US dollar, failed to maintain its dollar peg for the past month, leading to the pegging of its larger stablecoin counterpart Tether faltered.
The instability quickly spread to another stablecoin and related cryptocurrency, Luna, which is a major player in decentralized finance, a sector of the industry that is trying to do away with centralized intermediaries like banks.
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The pressure from the broad sell-off in cryptocurrencies has continued to mount. 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 lenders’ margin calls.
On Monday, another Hong Kong-based crypto exchange Hoo announced a halt to transactions after customer withdrawals grew so large that they risked depleting the company’s available funds.
Hoo said in a blog post that it is “trying to reconfigure medium and long-term assets in an orderly and reasonable manner” to facilitate withdrawals, which would resume within 72 hours.
Additional reporting by William Langley in Hong Kong
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