Celsius halted transactions for its 1.7M customers in line with "extreme market conditions".
👉 Background: Celsius Network is one of the world’s biggest crypto service providers, valued at US$3.25bn. It allows users to deposit their crypto and receive weekly interest payments. It also makes loans... Kinda like a bank without the regulation.
👉 What happened: Celsius Network has paused withdrawals and transfers between accounts for its 1.7 million customers due to "extreme market conditions".
👉 What else: Celsius hasn't told customers when (or if) they'll get their money back. And it could run out of funds in just 5 weeks. All this to stop a bank run... for a company that isn't actually a bank?
💡A bank run is when a large number of customers of a bank - or another financial institution like Celsius - withdraw their cash all at once.
💡 It's generally because customers lose confidence in the bank's ability to manage or even return their money. But as more and more people try to withdraw their cash… The bank needs to use up its cash reserves to refund more customers.
💡Regulated banks need to have a certain amount of capital waiting in the wings to make sure a bank run doesn't happen. But Celsius ain’t a bank… so it’s hard to know whether they have the capital to pay out their customers 💸.
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