What is the Celsius Network and why did it freeze user withdrawals? - Crypto in Plain English - Episode 192 - by cryptohunt.it
Crypto in Plain English - by cryptohunt.it22 Jun 2022

What is the Celsius Network and why did it freeze user withdrawals? - Crypto in Plain English - Episode 192 - by cryptohunt.it

What is the Celsius Network and why did it freeze user withdrawals?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let's take a quick look at the Celcius Network, a crypto lending company that promised high returns on deposits… until they froze customers’ withdrawals.

So, what happened? Let’s look at how their company worked to understand what is going on here.

In a way, Celsius worked like a regular bank. If you put money into a normal checking account, it’s only there on paper. The bank actually takes that money and invests it, making a profit with the money you thought was just sitting there. Governments, however, limit what percentage banks can invest, and how much risk they can take, to protect you, the customer – at least to some extent.

Celsius did all of these things, without any of the limitations. Returns were abnormally high, driven by borrowers who speculated on increasing crypto prices.

But Celsius also offered special deals: If you bought their Celsius token, they would often give you much higher rates of return. That also only worked as long as people kept buying in, inflating the token’s value.

In the end it all collapsed, driven by falling crypto prices. It is unclear, if customers will see the whopping $8bn of their money back.

So consider this: Is government intervention such a bad thing in these cases? Do we need a little more balance? As always, we’ll let you be the judge.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

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