NATIONAL NEWS

Bitcoin plunges as major crypto lender halts operations

Jun 13, 2022, 1:26 PM | Updated: Jun 25, 2022, 8:54 pm

bitcoin...

MIAMI, FLORIDA - APRIL 8: A bitcoin logo is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 8, 2022 in Miami, Florida. The worlds largest bitcoin conference runs from April 6-9, expecting over 30,000 people in attendance and over 7 million live stream viewers worldwide.(Photo by Marco Bello/Getty Images)

(Photo by Marco Bello/Getty Images)

NEW YORK (AP) — Bitcoin and other cryptocurrencies were collapsing in price Monday, after a major cryptocurrency lender effectively failed and halted all withdrawals from its platform, citing “extreme market conditions.”

It’s the latest high profile collapse of a pillar of the cryptocurrency industry. These meltdowns have erased tens of billions of dollars of investors’ assets and spurred urgent calls to regulate the freewheeling industry.

Bitcoin was trading at roughly $23,400 Monday afternoon, down more than 16% in the past day. Ethereum, another widely-followed cryptocurrency, was down more than 20%.

On Sunday, the cryptocurrency lending platform Celsius Network announced that it was pausing all withdrawals and transfers between accounts in order to “honor, over time, withdrawal obligations.” Celsius, with roughly 1.7 million customers and more than $10 billion in assets, gave no indication in its announcement when it would allow users to access their funds.

Celsius is one of the bigger cryptocurrency lending platforms, with more than $11 billion in customer assets. In exchange for customers’ deposits, the company pays out extremely generous yields, upwards of 19% on some accounts. Celsius takes those funds and lends them out to generate a return.

Lending platforms such as Celsius have come under scrutiny recently because they offer yields that normal markets could not support, and critics have called them effectively Ponzi schemes.

It is the second notable collapse in the cryptocurrency universe in less than two months. The stablecoin Terra imploded in early May, erasing tens of billions of dollars in a matter of hours. Stablecoins have been seen as relatively safe, because they’re supposed to be backed by hard assets, such as a currency or gold.

Just like Terra, Celsius had sold itself as a safe place for cryptocurrency holders to deposit their funds. Even while Celsius was failing, the company’s website advertised that users can “access your coins whenever, keep them safe forever.”

“There is a lot of work ahead as we consider various options, this process will take time, and there may be delays,” Celsius said in a statement.

The move surprised investors and depositors. In online chats, they questioned why their investments weren’t protected.

It’s unclear whether Celsius depositors will get all their funds back. A cryptocurrency lender is not regulated like a bank, so there’s no deposit insurance and no legal framework for who gets their money back first, like in a bankruptcy. It’s possible that Celsius’ investors, which include Quebec’s pension fund, may get their investment back before Celsius’ depositors will.

“This was yet another bank run. You’re not reinventing anything here. They were promoting their services as a better savings account but in the end, you’re just another unsecured lender,” said Cory Klippsten, CEO of Swan Bitcoin, who has been publicly skeptical of Celsius’ business model for years.

Terra, and its token Luna, offered similar yields on customer deposits. Those tokens collapsed after huge customer withdrawals forced Terra’s operators to liquidate all of the assets being used to support their currencies. The collapse of Terra has spurred calls for reform from the cryptocurrency industry, and calls for Congressional regulation.

KSL 5 TV Live

National News

The Biden administration issued final rules Wednesday to require airlines to automatically issue ca...

David Koenig, AP Airlines Writer

Airlines will now be required to give automatic cash refunds for canceled and delayed flights

The Biden administration is setting new rules on airline fees and refunds. The Transportation Department said Wednesday that the final rules will spell out exactly when consumers are owed a refund for a delayed flight.

1 hour ago

Congress finalized legislation on April 23 that could lead to a nationwide TikTok ban, escalating a...

Brian Fung, CNN

Biden just signed a potential TikTok ban into law. Here’s what happens next

President Joe Biden signed a bill Wednesday that could lead to a nationwide TikTok ban, escalating a massive threat to the company’s US operations.

3 hours ago

WASHINGTON, DC - APRIL 24: U.S. President Joe Biden delivers remarks after signing legislation givi...

Aamer Madhani and Seung Min Kim

Biden signs a $95 billion war aid measure with assistance for Ukraine, Israel and Taiwan

President Joe Biden has signed into law a $95 billion war aid measure that includes assistance for Ukraine, Israel, Taiwan and other allies.

3 hours ago

FILE - Chad Daybell is on trial for the murders of his wife Lori Vallow Daybell's two children, Jos...

Mary Culbertson

Tammy Daybell’s voice heard in court following emotional testimony

During the ninth day of Chad Daybell's murder trial, Tammy Daybell's voice was heard in the courtroom in a phone call with a dispatcher.

20 hours ago

In this photo released by the MacDill Air Force Base, an alligator rests at the landing gear of a K...

Associated Press

Alligator on runway at MacDill Air Force Base in Florida captured, released into nearby river

A large alligator made its way onto the runway at MacDill Air Force Base in Florida where it had to be captured and taken away for release in a nearby river, officials said.

20 hours ago

FILE - The Federal Trade Commission (FTC) building in Washington, on Jan. 28, 2015. The Federal Tra...

Christopher Rugaber, AP Economics Writer

The FTC voted to bar ‘noncompete’ agreements for most employees

The Federal Trade Commission voted to ban measures known as noncompete agreements, which bar workers from jumping to or starting competing companies for a prescribed period of time.

20 hours ago

Sponsored Articles

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why Printer Security Should Be Top of Mind for Your Business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Bitcoin plunges as major crypto lender halts operations