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Celsius Network Pauses Withdrawals – What Will Happen

Last Updated on June 25, 2022 by tim

On June 12, 2022 Celsius released a blog post stating that all withdrawals, cryptocurrency exchanging, and transfers between accounts would be paused due to “extreme market customers”. As a former Celsius Network customer, I have been closely tracking the current situation as I am concerned about the future of Celsius users and cryptocurrency itself. Here are my thoughts on the current situation and some possible outcomes for Celsius and its users.

  • Why Did I Withdraw My Funds From Celsius?

As I stated before, I am a former Celsius Network customer and withdrew my funds before Celsius paused withdrawals. I withdrew my funds due to nonaccredited investors being blocked from earning interest as of April 15, 2022. I figured that this was a sign that the government was starting to clamp down on the cryptocurrency investing/lending space, and wanted to get my coins out in case things got worse. Nowhere in my mind did I envision withdrawals being paused only 2 months from the announcement about mandatory investor accreditation.

  • What Is the Likely Outcome for Celsius?

Currently, withdrawals have been paused for 2 weeks with no clear timeline or plan on when withdrawals would be reinstated. As much as I hate to say it, I believe that it is becoming increasingly likely that withdrawals will never be reinstated. The moment that Celsius turns on withdrawals, everyone will start rushing to withdraw their cryptocurrency–and Celsius likely does not have enough cryptocurrency on hand to satisfy all withdrawals. I believe that Celsius is likely on the brink of bankruptcy, which would mean that current investor assets would be wiped out in the bankruptcy process.

  • What Should I Do if I’m a Celsius Customer?

Unfortunately, there is a good chance that your coins are gone and you should treat it effectively as a loss. One thing that all Celsius customers should immediately do is export their transaction history to CSV and save it in a safe place. Celsius has documentation on how you can do this. If the Celsius website and mobile app are taken down, you have a copy of your transactions if you ever need it. I would also advise you to save screenshots of your current account balance, in case it is needed for litigation or if a chance is ever given to claim your assets. You might only receive a percentage of your deposited assets, but it is better than nothing.

  • What Does This Mean for Cryptocurrency?

The Celsius collapse shows that it is not safe keeping your cryptocurrency in third-party wallets. I would advise anyone to immediately withdraw all Bitcoin, Ether, etc. from third-party platforms and save your coins in secure cold storage with private keys that only you own. It is likely that more crypto lending platforms will collapse, and what happened with Celsius will likely be repeated. Do not store all your cryptocurrency in one place, spread out your coins among multiple wallets so that in the event one wallet is compromised you will not lose all of your coins.

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