The crypto lender Celsius announced that it is pausing customer withdrawals, transfers, and swaps. This was done to stabilize liquidity, so that the lender can honor its withdrawal obligations in the future.
Celsius’ CEL token quickly plummeted by 70%. It now amounts to $0.15, according to CoinMarketCap. However, Celsius’ customers will keep accruing rewards despite the pause.
Celsius functions by lending out its customers’ crypto deposits, and offering the customers high yield returns for their deposits. However, many regulators have equaled these yield returns to unregistered securities offerings. Thus, four U.S. states (Texas, New Jersey, Kentucky, and Alabama) sent cease-and-desist letters to Celsius by last September.
Celsius’ competitor BlockFi was able to reach a $100 million settlement with the U.S. Securities and Exchange Commission (SEC). BlockFi then agreed to register its investment products so that they can be approved by SEC. However, Celsius is yet to do the same.