Crypto Withdrawals Blocked

The assault on cryptocurrency investors hit a new low in June as a leading “crypto-bank” that had aggressively lured investors prevented them from redeeming their funds.

Crypto-bank Celsius Network halted withdrawals, saying the move was “due to extreme market conditions.” Celsius had advertised yields as high as 18 percent—paid in cryptocurrency—to investors who deposited their cryptocurrency holdings with the company so it could lend and trade with their digital tokens. 

The freeze on withdrawals—and the apparent unraveling of Celsius—came amid panic selling in the crypto market, following the complete collapse of two currencies, Luna and TerraUSD, a so-called stablecoin that was supposed to have a fixed value linked to the U.S. dollar.

Three days into the freeze on withdrawals, Celsius’ CEO Alex Mashinsky tweeted, “This is a difficult moment; your patience and support mean the world to us,” saying nothing about investors’ ability to access what remained of their holdings.

Separately, Binance, a leading crypto exchange, temporarily suspended Bitcoin withdrawals on Monday, June 13, “due to a stuck transaction causing a backlog.”

Other cryptocurrency companies were slashing payrolls in an effort to survive what some industry players described as a “cryptowinter” that threatens the fragile industry.

Sadly, cryptocurrencies were promoted as “digital gold,” “a store of value,” and a “perfect hedge against inflation.” Crypto, it turns out, is none of those. 

Cryptocurrencies are plunging as inflation has soared to a four-decade high. With the cryptocurrency market having lost two-thirds of its value since autumn of 2021, the once highflying digital currencies have become a sinkhole for anyone who purchased in the past year.

The cryptocurrency market is unregulated. But, securities regulators still have tried to crack down on Celsius Network. Officials in Texas, Alabama, and New Jersey last year said Celsius Network’s deposit accounts were unregistered securities offerings. Saying it was acting to protect investors, New Jersey’s Bureau of Securities last September issued a cease-and-desist order against Hoboken-based Celsius requiring it to stop offering and selling interest-earning cryptocurrency investment products.