NEW YORK — The price of bitcoin and other cryptocurrencies plummeted on Monday, after a major crypto lender halted all withdrawals citing “extreme market conditions.”
This is the second collapse for part of the cryptocurrency world in the past two months. The Terra stablecoin imploded in early May, wiping out tens of billions of dollars in a matter of hours.
Bitcoin was trading at around $22,600 as of midday Monday, down more than 17% over the past day. Ethereum, another widely followed cryptocurrency, fell over 20%.
On Sunday, the Celsius lending platform announced that it was suspending all withdrawals and transfers between accounts in order “to honor, over time, withdrawal obligations”. Celsius, with around 1.7 million customers, gave no indication in its announcement when it would allow users to access their funds.
“There is a lot of work to do as we look at various options, this process will take time and there could be delays,” he said.
Celsius is one of the largest cryptocurrency lending platforms, with over $11 billion in client assets. In exchange for customer deposits, the company offers extremely generous returns, up to 19% on some accounts. These lending platforms have recently come under scrutiny for offering returns that normal markets couldn’t support, and critics have called them Ponzi schemes.
Terra and its Luna token offered similar returns on customer deposits. These tokens collapsed after huge customer withdrawals forced Terra operators to liquidate all assets used to back their currencies. Terra’s collapse has prompted calls for reform from the cryptocurrency industry and calls for regulation from Congress.