The downturn in the crypto market increases the risk to lending companies
The decision to ban Celsius Network's customer transactions is being investigated by regulators. Celsius said it was banning withdrawals and transfers between accounts due to the poor state of the crypto market.
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These companies offered loans at low interest rates to grow the business.
He was paying heavy rates on deposits
The customers of these companies are facing difficulties
Cryptocurrency lending companies and their customers are facing major financial risks due to the downturn in the crypto market and the lack of regulatory protection. These companies offered loans at very high interest rates to grow the business despite paying hefty rates on deposits. Celsius Network, one of the major crypto lending companies, banned transactions last month.
“The Celsius network is going to go bankrupt soon,” said Omid Malek, a professor at Columbia University. Several other crypto lending companies, such as CoinFlex and Babel Finance, have also blocked withdrawals, according to AFP. These companies offered cryptocurrencies to customers to make deposits and to earn interest on them or to borrow them as collateral. Many customers of these companies are facing difficulties due to the suspension of transactions. They are also likely to lose their funds.
The decision to ban Celsius Network's customer transactions is being investigated by regulators. Celsius said it was banning withdrawals and transfers between accounts due to the poor state of the crypto market. The firm's decision to freeze transactions is being investigated by several regulators, including the Texas State Security Board. The US Securities and Exchange Commission (SEC) has also sought information from the firm. "I am concerned that the firm's customers, including retail investors, may need to redeem their assets but they can do so. This could exacerbate their financial difficulties," said Joseph Borg, director of the Alabama Securities Commission.
Many companies in this segment are reducing their employees to reduce costs. Coinbase, one of the major crypto exchanges, has also recently decided to reduce the number of its employees by 18 percent. The US-based company says it has taken this step to reduce costs in these difficult times for the industry. The decision is expected to result in layoffs of more than 1,000 employees.
25-Jun-2025