It is reminiscent of gloomy times from the financial crisis of 2008: desperate customers who want their savings. Men in suits who are disillusioned with carrying their cardboard boxes filled with personal office items from well-paid jobs on Wall Street because they have been fired. Tragic images for eternity.
Something similar is happening in the crypto sector these days. For example: Crypto.com 260 Employees are dismissed at short notice. There is no other way to say it: crypto is in crisis. True, the pictures are less strong. After all, everything is happening in the digital space. But the personal fates are similar.
Because if you had invested your savings on the lending service Celsius, you now have to worry about your money. We remember: Celsius has stopped all withdrawals since yesterday. We reported.
In other words, if Celsius cannot avert the impending insolvency, customer deposits are gone. This could lead to what should actually be unthinkable in the crypto sector. To abolish financial dependence on third parties – that’s what Bitcoin and Co. originally started for. Now Celsius seems to be broke and the clientele is once again taking the short cut – similar to the subprime crisis back then, retail investors are the ones suffering.
This is precisely the brutality that can also become a reality in the crypto sector. Because whoever holds cryptocurrencies on exchanges like Celsius may be the owner of the coins, but not the owner. A significant difference, because similar to euros on the current account, BTC on Bitcoin brokers are only IOUs, i.e. payout promises.
Reddit becomes a support group
However, those who have trusted in the promises of Celsius from the past are faced with real human destinies. For example, the Twitter user “FlyingSpoon” writes that he keeps USDC on his account, but cannot use it, since all withdrawals are frozen.
I have USDC in my account that I want to use to repay my loan that has a margin call right now, but I can’t even repay the damn loan because of the transfer freeze. That’s ridiculous. If the market tanks, celsius will liquidate my collateral even though I can pay off my loan!!!
– FlyingSpoon (@flyingspoon8891) June 13, 2022
That’s bitter. Because in this case, due to the liquidity shortage, not only his deposits would be at risk, but on top of that, his loan would also be liquidated. A double punishment of an investor who has done nothing wrong.
But that’s just the tip of the iceberg. The subreddit r/CelsiusNetwork is already discussing legal action against Celsius. The user u /Warr1979, for example, announces a class action lawsuit against those responsible for the fiasco.
Others, of course, are hopeful. For example, u/ Infamous_Spot_6086 reports on a phone call with Celsius support, which made him feel confident.
“I am confident. It is definitely helpful that you maintain the support to ensure the safety of the funds. Anyway, we’re all in this boat together.”
But you can’t get rid of the unpleasant feeling that the boat can no longer withstand the troubled waters for a long time. Celsius is in danger of drowning in its own risky business model.