Three days after crypto lender Celsius abruptly announced that it was pausing all customer withdrawals, swaps, and transfers, the beleaguered company’s CEO, Alex Mashinsky, has finally broken his silence on the matter.
But Mashinsky offered little comfort to those hoping for answers as to when users will again be able to withdraw funds.
Mashinsky took to Twitter this afternoon, speaking publicly for the first time since his company froze withdrawals Sunday night, to assure the Celsius community that the company’s team is working “non stop” on the issue, and to request customers’ continued patience.
@CelsiusNetwork team is working non-stop. We’re focused on your concerns and thankful to have heard from so many. To see you come together is a clear sign our community is the strongest in the world. This is a difficult moment; your patience and support mean the world to us.
— Alex Mashinsky (@Mashinsky) June 15, 2022
Notably, Mashinsky gave no answer as to when he aims or expects to have Celsius operating again. Twitter users soon after pleaded with the embattled CEO for commitments to the security of customers’ deposits, but Mashinsky did not respond further.
Please don’t let me down I don’t mind waiting for my either I had 45 ETH which I was saving for my new house I’m crying and praying to God that I will be able to get that money out. It took 4 years and me working 100 hours every week to save Can’t sleep
— Henry (@Henry69242220) June 15, 2022
Celsisus paused withdrawals on Sunday to “stabilize liquidity” and “preserve and protect assets” after a particular cryptocurrency offered on the platform, Lido’s Staked Ether (stETH), began experiencing irregularities.
stETH, which represents Ethereum locked on the Ethereum 2.0 beacon chain (which will eventually merge with the Ethereum mainnet) is meant to be pegged to ETH’s value. For this reason, stETH is often used as collateral on platforms like Celsius for borrowing ETH.
But, as other crypto markets fell apart, stETH recently lost its peg to heavily-fluctuating ETH. For customers to withdraw ETH, Celsius would sell off its stETH stores. If a large number of customers concerned about the recent depegging moved to withdraw, such an event would force Celsius to sell off massive portions of its $472 million stETH supply. That would further lower stETH’s price and almost certainly leave the company with insufficient liquidity to cover its ETH obligations to customers.
It’s unclear how Celsius will remedy the issue if stETH remains depegged from ETH (as of writing, stETH is currently trading at .93 ETH). Today the company reportedly hired attorneys to look into restructuring the company if other financing sources cannot be found.
On Sunday, news of the withdrawal freeze sent Celsius’ native token plummeting 70% in a single hour. Just a day before, Mashinsky was tweeting much more liberally, lambasting a Twitter user for spreading ‘fear, uncertainty, and doubt’ when they cited rumors that retail investors were getting locked out of Celsius accounts:
Mike do you know even one person who has a problem withdrawing from Celsius?,
why spread FUD and misinformation.
If you are paid for this then let everyone know you are picking sides otherwise our job is to fight Tradfi together…
— Alex Mashinsky (@Mashinsky) June 11, 2022
The situation seems to have taken Celsius leadership completely by surprise, and it remains unclear when and if a plan to remedy it will be made public.
Want to be a crypto expert? Get the best of Decrypt straight to your inbox.
Get the biggest crypto news stories + weekly roundups and more!