There is no sign of reinstatement four days after Celsius Network suspended withdrawals, swaps and transfers between accounts.
It was revealed that the company had hired a team of lawyers to help it assess its situation. This further raised concerns about users losing their money.
Users have begun to post accounts detailing how they were affected by the situation. This is similar to the Terra victims’ stories.
Celsius users’ accounts
Alex Mashinsky, CEO of Celsius Network, gave an update on Wednesday. He stated that the team is “working non-stop” in order to resolve the situation. He said that the company was focusing on user concerns and asking for patience and support throughout this period.
The @CelsiusNetwork team works non-stop. We are grateful to have received so many of your concerns. It is clear that our community is stronger than any other in the world when we see people coming together. It is difficult at this time. Your patience and support are invaluable to us.
— Alex Mashinsky (@Mashinsky) June 15, 2022
The tweet received over 1,100 responses at the time of writing. Many of these were from anxious users looking for concrete information about what was happening on the lending and borrowing platform.
One user stated that he was disbelieving at being denied access to his 28 ETH life savings. He feels suicidal and isolated because he cannot talk to his family about it.
I can’t believe it…my life savings were there…28eth
….I am going to kill myself I can’t tell my family I would like to disappear from this world ….
Filipe (@Philip_hodl), June 15, 2022
Another user stated that he could not sleep because he worried about all the hard work that went into building his 45ETH balance on the platform. He hopes that things will turn out for the best.
Please don’t disappoint me I don’t mind waiting my either. I had 45 Ethereum which I was saving to buy my new house. I’m still crying and praying that God will allow me to withdraw that money. It took me 4 years to save. I worked 100 hours a week.
Henry (@Henry69242220), June 15, 2022
Many replies to Celsius called for a halt to rewards, a decrease in liquidity obligations and restitution of withdrawals. However, one Redditor explained that this would likely cause an “almighty run”, leaving the platform without assets.
It’s a difficult situation right now. They will have to close withdrawals once more, which would render the platform inoperable (it requires assets to function). This will be known by the owners.
What went wrong?
Jack Niewold, founder of Crypto Pragmatist, took a deep look at the situation and identified the problems with Celsius.
Niewold stated that the firm makes its money by borrowing funds from users to fund other yield protocols such as Terra UST stake interest.
1. Initiating loans to individuals and institutions 2. Profits from running strategies for their customers are kept.
They can also keep 15% if they advertise 5% USDC deposits and then swap $USDC for $UST to make 20%.
— Jack Niewold (@JackNiewold) June 13, 2022
Although this model is common in the industry, Niewold claims Celsius lost its way because they managed “their funds like dergens” and took on too much risk.
Due to the firm’s exposures to the Terra ecosystem, and stETH, a downturn caused Celsius liquidity to dry up, forcing them stop withdrawing.
It’s not clear at this time if Celsius has enough assets to pay its liabilities. This is bad news for users. Or, whether the firm is able to meet its obligations. However, its assets are primarily inliquid.
Niewold signed the thread and stated that this situation had further damaged the industry by bringing more regulatory heat to the table and more points for no-coiners in their quest to justify their position.
The news is clearly affecting markets and forcing big institutions to sell their stock: this is not a good sign.
This requires regulation, oversight and legal action by governments, institutions, as well as critics, just like always.
It is a dark day for crypto.
Be safe
— Jack Niewold (@JackNiewold) June 13, 2022
Celsius users post heartbreaking posts about the fourth-day CryptoSlate withdrawal freeze
Did you miss our previous article…
https://www.goldcoastmoneyonline.com/three-arrows-capital-insolvency-rumors-raise-questions-about-defis-soundness/
