Binance suspends bitcoin withdrawals amid digital asset collapse

Binance halted bitcoin withdrawals for several hours on Monday after cryptocurrency lender Celsius also barred customers from withdrawing funds from its platform, citing “extreme market conditions” as digital asset prices plummeted.

Bitcoin, ether and other key tokens have fluctuated in recent weeks as inflation soared and major central banks indicated that they will sharply reduce economic stimulus. But they fell sharply again on Monday, with growing signs that the infrastructure that underpins the digital asset market is cracking under the pressure. Binance blamed a “stuck transaction” for its suspension.

Bitcoin, the world’s most traded cryptocurrency, has dropped nearly 20% since Friday, to less than $24,000, its lowest level since December 2020, according to data from the CryptoCompare website. Meanwhile, the overall cryptocurrency market cap has dropped from a peak of $3.2 trillion in November to around $1 trillion on Monday.

Celsius is one of the biggest players in the digital asset product market, offering users the ability to lend their tokens as collateral for other cryptocurrency projects. In exchange for lending their tokens, traders were able to earn annual returns of up to 17%.

Sentiment towards these high-risk projects has cooled dramatically after the Terra and Luna tokens – which were the basis of another popular yield platform – collapsed within days last month. The value of assets deposited on the Celsius platform has shrunk from more than $24 billion at the end of December to less than $12 billion on May 17.

Ether, which is considered a symbol of sentiment for digital asset projects offering high yields to investors, has dropped nearly 30% since Friday, becoming two-thirds cheaper in dollar terms this year, trading at $1,195.

Monday’s sales also bounced off cryptocurrency-focused stocks. MicroStrategy, a technology company that invests heavily in bitcoin, lost a quarter of its value in early trading on Wall Street, while Nasdaq-listed cryptocurrency exchange Coinbase dropped 16%.

Last year, Celsius raised $400 million in an equity funding round led by Caisse de Dépôt et Placement du Québec, Canada’s second-largest pension fund, and WestCap, a fund created by the former Airbnb and Blackstone executive. Laurence Tosi.

In a statement, CDPQ said it was “closely monitoring the situation”.

“In an environment of widespread market decline (stock and bond markets – for the first time in 50 years), investors are reducing their risk across all asset classes,” he said.

“In this context, Celsius has been impacted by very difficult markets in recent weeks, more specifically by the strong volume of customer withdrawals. Celsius is taking proactive steps to fulfill its obligations to customers (Celsius community) and has honored its obligation to customers so far.”

WestCap did not immediately respond to a request for comment on its investment.
This fundraising took place even as US regulators indicated they were scrutinizing the industry. State officials in Texas and New Jersey claimed that Celsius’ yielding accounts amounted to an unregistered bond offering.

Celsius’ suspension on Monday was also a turnaround, after spending several days refuting accusations that customers were unable to make withdrawals. Chief executive Alex Mashinsky challenged critics over the weekend to find “a single person who has trouble cashing out.”

Celsius, which has offices in the US, UK and Lithuania, said the redemption freeze was done “for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets.” “.

The group’s own currency, known by the ticker CEL, has lost half its value in the last 24 hours, according to data from CryptoCompare.