Celsius Network, an interest-earning yield platform, has frozen withdrawals after using a myriad of failed decentralized finance (DeFi) strategies.
It suffered a series of severe losses including over 38,000 ETH in a blunder related to Stakehound, followed by a $22 million loss in connection with the Badger DAO hack.
Customers now fear they will never be able to access funds that are locked on Celsius.
Already reeling from last month’s LUNA collapse, the cryptocurrency market has shed $180 billion off its market cap in the wake of Celsius’ announcement, and major exchanges have announced job cuts.
If the collapse of LUNA was cryptocurrency’s Bear Stearns moment, Celsius Network threatens to become the industry’s Lehman Brothers: the failure that exacerbates a market crisis.
Celsius, which resembles a bank while touting itself as a democratized interest income and lending platform, is rumored to be insolvent following a freeze on withdrawals over the weekend. Founded in 2018, Celsius had more than $8 billion lent out to clients and $12 billion in assets under management by May of this year, according to the company.
In the wake of the withdrawal freeze, Coinbase, BlockFi and Crypto.com have announced job cuts, while insolvency rumors are also beginning to emerge from crypto hedge fund Three Arrows Capital.