Bitcoin Plunges As Major Crypto Lender Halts Operations

NEW YORK — Bitcoin and other cryptocurrencies were collapsing in price Monday, after a major crypto lender halted all withdrawals citing “extreme market conditions.”

This is the second time that a cryptocurrency sector has collapsed in two months. Terra stablecoin collapsed in May and erased tens billions of dollars within hours.

Bitcoin trades at approximately $22,600 Monday midday, down over 17% since the last day. Ethereum, another popular cryptocurrency was also down by more than 20%.

Learn More New York’s Crypto Mining Moratorium Could Help National Environment.

On Sunday, the lending platform Celsius 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, gave no indication in its announcement when it would allow users to access their funds.

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

Celsius is the biggest cryptocurrency lending platform, boasting more than $11 million in customer assets. In exchange for customers’ deposits, the company gives out extremely generous yields, upwards of 19% on some accounts. Because these lending platforms offer yields beyond what normal markets can support, critics call them Ponzi schemes.

Terra and Luna offered the same yields to customers who made deposits. Those tokens collapsed after huge customer withdrawals forced Terra’s operators to liquidate all of the assets being used to support their currencies. Terra’s collapse has prompted calls for reform in the cryptocurrency industry and for Congressional regulation.

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