Another crisis is spreading new worries throughout the whole digital-asset ecosystem. A month after the crash of the Terra stablecoin sent the cryptocurrency market plunging.
After weeks of speculation about its ability to make good on the outsized returns, Celsius Network, one of the largest lenders in crypto, announced on Sunday that it was halting withdrawals, swaps, and transfers.
The decision stopped a platform with registered entities worldwide and billions of dollars in digital coins under management, hastening a sell-off in the wider market. The news from Celsius just made it worse, increasing market concern, stated Vijay Ayyar, vice president of corporate development and international at crypto platform Luno.
Prices are under a lot of pressure as we approach the Fed decision week, and there are worries about the systems that supply high-yield products.
The crash is the latest setback for the cryptocurrency market and DeFi, its mostly unregulated alternative to conventional banking – which, at its best, offers consumers more freedom, bigger profits, and cheaper expenses while also introducing more hazards and fewer protections.
The meltdown of the TerraUSD (UST) stablecoin and its sister token Luna drew the majority of market attention in May, but one of the project’s main draws for investors had been its pledged interest rate, which was 20% for UST deposits in the lending project Anchor.
While Celsius is a centralized platform that distinguishes it from DeFi, its profound participation in space, such as its investment in Terra has raised questions about its viability.
Both TerraUSD and Celsius were built on the promise of ultra-high returns to keep demand afloat, which was reliant on a continual stream of new members feeding the system, or borrowing or other forms of investment to cover the high rates.
