Cryptocurrency plunges as crypto “bank” Celsius suspends withdrawals
Cryptocurrency plunges as crypto “bank” Celsius suspends withdrawals

          
          
"Somebody is lying," Mashinsky said. "Either the bank is lying or Celsius is lying."
While Celsius offers higher interest rates than a traditional bank, Celsius deposits are not protected by the Federal Deposit Insurance Corporation, which provides a financial backstop for deposits in conventional banks. This means that if Celsius were to get into financial trouble, some customers might not get all their money back.
In a blog post last week, Celsius swatted away rumors that it was having financial difficulties.
"At this already challenging time, it’s unfortunate that vocal actors are spreading misinformation and confusion," the company wrote. "They have tried unsuccessfully, for example, to link Celsius to the collapse of Luna and falsely claim that Celsius sustained significant losses as a result."
That was a reference to last month's news that terra, an "algorithmic stablecoin," had proven not to be so stable in practice. Terra's value was supposed to be pegged to $1, with the related cryptocurrency luna supposedly providing a backstop for this peg. But the whole house of cards came crashing down last month amid a broader cryptocurrency sell-off.
Celsius has grown rapidly over the last year, attracting increased regulatory scrutiny. Last September, regulators in several states opened investigations into the company's business practices, arguing that the company's lending products may constitute unregulated securities.
Celsius hasn't provided details on the "extreme market conditions" that led the company to suspend withdrawals. Celsius claims it is working diligently to resume withdrawals, but users have good reason to worry about the company's financial health.
A crypto winter?
Across the cryptocurrency sector, companies are tightening their belts with expectations that recent price declines might last for a while.

          
                  