The crypto-lending firm Celsius Network halted withdrawals and transfers, amid an apparent liquidity crisis, as the price of Bitcoin plunged to pre-pandemic levels.
Celsius, which promises high-yield returns on customer deposits, appears to be the latest crypto company to buckle under tightening financial conditions. It comes just one month after the collapse of the Terra-Luna stablecoin network.
Celsius operates like an unregulated bank, enticing customers with staggeringly rates for deposits of cryptocurrencies, and then loaning out those deposits to other customers. Celsius says its loans are collateralized in Bitcoin (though not all of them are), and there is no assurance it can pay out customers in the event of a rush of withdrawals, especially since Bitcoin’s price has fallen 40% in the last year.
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