Crypto market value tumbles after lender Celsius Network stops withdrawals

business-standard.com:

Celsius Network Ltd. paused withdrawals, swaps and transfers after weeks of speculation over the sustainability of the outsized returns being offered by the DeFi lending platform, fueling a broad cryptocurrency selloff.

Crypto markets tumbled after the Celsius announcement, with Bitcoin dropping as much as 14% to the lowest level since December 2020 and other major tokens like Ether also falling sharply. Celsius’s CEL token was down about 50% to 19 cents as of 7:16 a.m. in New York Kong, according to pricing data site CoinGecko.

The meltdown is the latest blow to DeFi, or decentralized finance, crypto’s answer to traditional finance, with more control and less costs for users but also less oversight and more risk.

Doubts about the sky-high yields backing products such as those Celsius offers have intensified after the collapse of the Terra ecosystem in May, and as tighter monetary policy across the world curbs demand for riskier assets. The CEL token promises “actual financial rewards,” including as much as 30% extra returns weekly, according to its website.

While the collapse of the TerraUSD (UST) stablecoin captured most of the market’s attention, one of the project’s main attractions for investors had been its promised interest rate, set as high as 20% for UST deposits in the Terra blockchain-based lending project Anchor. Celsius was an investor in the project. Both revolve around the promise of super-high yields to keep up demand, which itself depended on a steady flow of new entrants feeding the system, or borrowing to pay the high rates.

Nexo, a London-based competitor, announced on Twitter that it’s ready to buy any “remaining qualifying assets” of Celsius, which it defined as “mainly their collateralized loan