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Major crypto lender Celsius freezes withdrawals as markets tumble

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© Reuters. FILE PHOTO: A representations of cryptocurrencies in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration

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By Tom Wilson, Alun John and Abinaya V

LONDON (Reuters) -Major U.S. cryptocurrency lending company Celsius Network on Monday froze withdrawals because of “extreme market conditions,” in the latest sign of pressure on the sector from tumbling crypto markets.

Celsius Network, a significant player in crypto lending, offers interest-bearing products to customers who deposit their cryptocurrencies with the company, and lends out crypto currencies to earn a return.

It raised $750 million in funding late in November from investors, including Canada’s second-largest pension fund. The company was valued at the time at $3.25 billion.

In a blog post, the company said it had frozen withdrawals, as well as transfers between accounts, “to stabilise liquidity and operations while we take steps to preserve and protect assets.”

“We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.”

The Celsius move puts the spotlight on the sustainability of crypto lending firms after a period of breakneck growth last year fuelled by low interest rates and booming crypto markets.

The surge of interest in crypto lending led to concerns from regulators, especially in the United States, who are worried about investor protections and systemic risks.

MARKETS UNDER PRESSURE

Crypto markets have come under pressure alongside stocks and other assets in financial markets amid rising interest rates and surging inflation. The collapse in May of the so-called stablecoin terraUSD and its sister token luna has also shaken the crypto industry.

The largest cryptocurrency bitcoin fell further after Celsius’s announcement, dropping more than 7.8% to $24,502, its lowest since December 2020.

Ether, the second largest token, dropped as much as 12% to $1,245, its lowest since March 2021.

Major investors and venture capital firms bet heavily last year on the crypto lending sector.

As of May 17, Celsius Network had $11.8 billion in assets, its website said, down by more than half from October, and had processed a total of $8.2 billion worth of loans.

CEO Alex Mashinsky was quoted in October last year saying Celsius had more than $25 billion in assets.

Mashinsky did not immediately respond to a text message seeking comment outside U.S. business hours.

In a tweet on Monday, rival crypto lender Nexo said it had offered unspecified help to Celsius, but was refused. It said it was “putting together an offer” for any assets.

The company’s website on Monday was offering interest rates of up to 18.6%.

Economy

South Korean exports dropped 14% in November, the highest in 2.5 years

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exports South Korea

South Korea’s exports fell 14 percent year-on-year to $51.91 billion in November, preliminary data from the Ministry of Commerce, Industry and Energy showed. The November drop was the biggest in 2.5 years since May 2020 and was caused both by the deteriorating global economy, which even a Google price chart showed, and a truckers’ strike in the country.

South Korea exports 2022 – reasons for the drop

Exports fell for the second month in a row. Analysts on average expected an 11% decline, according to Trading Economics. Respondents to MarketWatch predicted a 10.5% decline.

Shipments of semiconductor products overseas, the country’s top export item, fell 29.8%; petrochemicals fell 26.5% and steel exports fell 10.6%. Meanwhile, exports of automobiles jumped 31% and petroleum products 26%.

Exports to China, South Korea’s largest trading partner, fell by 25.5%, and to Asian countries – by 13.9%. Below, supplies to the USA grew by 8% and to the European Union – by 0.1%.

In January-November exports rose by 7.8% on the same period last year and reached a record $629.1 billion.

South Korean imports rose 2.7% to $59.2 billion in November, marking the 23rd consecutive month of gains, but the current rate of growth is the lowest since November 2020. Experts had predicted an increase of only 0.2%.

South Korea’s trade deficit last month was $7.01 billion, compared with a surplus of $2,973 billion a year earlier.

The negative balance was recorded for the eighth month in a row. As a result, by the end of 2022, the country may record a foreign trade deficit for the first time since the financial crisis in 2008.

Earlier we reported that the UN estimates the cost of humanitarian aid in 2023 at a record $51 billion.

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Economy

The UN estimates humanitarian aid costs in 2023 at a record $51 billion because of an impending humanitarian crisis

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a humanitarian crisis

Joint humanitarian operations will require a record $51.5 billion in 2023 to address urgent problems.

The UN Office for the OCHA estimates that 339 million people will need urgent aid in 2023. At the same time, OCHA called on donor countries to provide funds for assistance in 2023 to the 230 million people most in need, living in 68 countries.

Griffiths explained that aid is needed not only for people experiencing conflicts and disease outbreaks. but also for those suffering the effects of climate change, such as people in peninsular Somalia facing drought and those in Pakistan experiencing severe flooding. For the first time, the growing humanitarian crisis has brought the number of displaced people worldwide to the 100 million mark. Also worsening an already bad situation is the worldwide coronavirus pandemic, which affects the poor. Note that the general economic crisis has begun to negatively affect even the Netflix price chart.

Earlier we reported that house prices in the UK fell by 1.4% in November.

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Economy

Average house prices in the UK fell 1.4% in November

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Average house prices in the UK fell 1.4% in the previous month in November to 263,788 thousand pounds (about $319,000), according to the British mortgage company Nationwide Building Society.

The decline was recorded at the end of the second consecutive month and was the most significant in almost 2.5 years – since June 2020. Analysts on average had forecast a decline of only 0.3%, according to Trading Economics.

Are house prices in the UK going to fall even more?

Residential real estate prices in November compared to the same month last year increased by 4.4%. At the same time, experts expected a larger increase of 5.8%. The growth rate slowed down significantly compared with 7.2% in October. Because of the difficult economic situation, British investors are investing in other instruments. The Microsoft price chart, for example, is showing potential for growth, so many are interested in the U.S. stock market. 

“The market looks set to remain under pressure in the coming quarters. Inflation will remain high for some time, and interest rates are likely to continue to rise,” believes Nationwide Senior Economist Robert Gardner. – The outlook is unclear, and much will depend on how the overall economy behaves, but a relatively soft landing is still possible.”

Earlier we reported that Sanctions Circumvention was included in the EU’s list of criminal offenses.

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