These Crypto Exchanges Have Halted Withdrawals in June

Paigambar Mohan Raj
Source: Fast Company

The recent crypto market crash has left many investors and firms in the dirt. The way events unfolded is one for the history books. Most importantly, it presents essential lessons for the future.

One aspect of the latest crypto crash is that many exchanges have had to stop withdrawals to avoid insolvency. Let’s look at the businesses that have taken the aforementioned drastic step due to “market conditions.”

Celsius: Celsius Network is one of crypto’s most prominent centralized gateways. It was poised to rule the cryptocurrency industry after raising an astounding $864 million through venture capital. For its staggering 1.7 million user base, the network had stored over $3 billion in cryptocurrencies.

Celsius’ troubles began after it invested significantly in the stETH staking token. stETH enables users to stake money on the Ethereum blockchain and receive additional returns via DeFi. May saw a dramatic decline in the value of digital assets, which resulted in stETH trading at a discount and increased illiquidity. Due to this, it was more difficult for Celsius to acquire cash for redemptions when customers sought to take their money out. Celsius stated on June 12 that the withdrawal suspension was due to extreme market circumstances.

Babel Finance: Next on the list was Babel Finance, a Hong Kong-based crypto lending firm. On June 17, the firm announced that it would be halting withdrawals due to “unusual liquidity pressures.”

Babel Finance and its counterparties came to tentative arrangements on Monday over the settlement of some loans, which caused the platform to cease significant withdrawals.

CoinFLEX: The latest to join the bandwagon is CoinFlex. On June 23, the crypto exchange announced that it would halt withdrawals “Due to extreme market conditions last week & continued uncertainty involving a counterparty.” The exchange has not clarified who the counterparty is but has confirmed that it is not Three Arrow Capital.

The exchanges mentioned above may need significant time to recover from their current predicament. Moreover, halting withdrawals could continue to happen, given the current situation. Investors are at the edge of their seats. Many have lost life savings, and many have lost their hopes. Only time will tell how this scenario plays out.