Tag Archives: withdrawals

Voyager Digital suspends all trading, deposits, and withdrawals

With more than 19,000 virtual currencies in existence, the cryptocurrency industry has likened the current state of the market to the early years of the internet. Industry players said however that most of these coins will collapse.

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Digital asset brokerage Voyager Digital has paused all customer trading, deposits, withdrawals and loyalty rewards, according to a statement released Friday afternoon.

“This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Stephen Ehrlich, CEO of lending company Voyager.

Erlich went on to say that the decision is designed to give the firm additional time to continue “exploring strategic alternatives with various interested parties” and that they will provide additional information at “the appropriate time.”

Voyager’s announcement comes amid a raft of margin calls and defaults across the sector, making the digital broker the latest collateral damage of the broad market selloff in cryptocurrency. The two most widely traded cryptocurrencies, bitcoin and ether, are down more than 70% from their peaks last November, and the May collapse of the UST stablecoin sent shockwaves through an already tumultuous market.

The news comes a few days after one of Voyager’s customers failed to make payments on a loan worth hundreds of millions of dollars, fueling growing concerns of an insolvency contagion effect across the industry.

On Monday, the broker issued a notice that prominent crypto hedge fund Three Arrows Capital (3AC) had defaulted on a loan worth more than $670 million. At the time, Voyager said that it intended to pursue recovery from 3AC, and in the interim, said it would continue to operate and fulfill customer orders and withdrawals.

As of June 24, Voyager said it had approximately $137 million in U.S. dollars and owned crypto assets. The company also noted that it has access to a $200 million credit line in cash and USDC stablecoins, as well as a 15,000 bitcoin ($318 million) revolving credit line from Alameda Ventures, which is FTX founder Sam Bankman-Fried’s quantitative trading firm.

Last week, Alameda committed $500 million in financing to Voyager, and the firm has already pulled $75 million from that line of credit, but it appears that wasn’t enough to keep business running as usual.

Thus far, investors in the world’s two largest cryptocurrencies by market cap seem unfazed by the news. Bitcoin is up about 2% and ethereum is up more than 4% toward the end of regular market hours on Wall Street.

Voyager is a competitor to crypto lending firm BlockFi, which has also been caught in the crosshairs of the sector’s recent liquidity crunch. FTX has just struck a $680 million credit deal to acquire BlockFi, according to The Block.

Voyager’s decision tracks that of popular crypto staking and lending platform, Celsius, which similarly paused all withdrawals, swaps, and transfers between accounts due to “extreme market conditions” on June 13. Celsius has yet to announce tangible guidance on next steps.

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Unlikely to resume withdrawals Thursday

Bitcoin and and other cryptocurrencies are in free fall.

Dan Kitwood | Getty Images

Embattled cryptocurrency exchange CoinFlex will probably not be able to let customers withdraw money again on Thursday as it originally planned, CEO Mark Lamb said on Wednesday.

“We will need more time. And it’s unlikely that withdrawals will be re-enabled tomorrow,” Lamb told CNBC.

However, CoinFlex is in talks with several large funds interested in buying the $47 million in debt allegedly owed by investor Roger Ver, Lamb added.

CoinFlex is the latest victim of the cryptocurrency price crash that has seen billions of dollars wiped off the market in the latest “crypto winter.” Bitcoin has lost more than 50% of its value this year, and is off about 70% from its all-time peak last November, while ether is down 70% this year and more than 75% from its peak.

The cryptocurrency exchange paused withdrawals for customers last week citing “extreme market conditions,” and said an individual investor owed it around $47 million. Initially, CoinFlex did not name the customer, but on Tuesday, Lamb claimed the investor is Roger Ver, who has been dubbed “Bitcoin Jesus” for his evangelical views on cryptocurrency in the early days of the industry.

Ver has denied that he owes CoinFlex the money. Ver was not immediately available for comment on this story when contacted by CNBC.

CoinFlex claimed that Ver’s account went into “negative equity.” Normally, the exchange would liquidate an investor’s position in this situation. But Ver had a particular agreement that meant this did not happen, the exchange said.

To fix the $47 million hole in CoinFlex’s balance sheet, the company is issuing a token called Recovery Value USD, or rvUSD, and enticing investors with a 20% interest rate for holding the virtual currency. Lamb said the ability to pay that interest rate would come from recouping the funds from Ver plus a “financing charge” that has been imposed on him.

Lamb said “we don’t know what’s going to happen after if he doesn’t repay or if he does repay, our focus right now is on … getting … these funds raised.”

He added he is confident “that one way of another, this recovery is going to happen.”

Lamb said that the company is talking to multiple funds that buy distressed debts of companies, and that could potentially buy the entire $47 million.

“The good news is that the number of players that have reached out that are interested in this debt offering and this token offering are extremely well capitalized,” Lamb said, adding that some of the funds that have gotten in contact have more than $10 billion in assets under management.

Lamb said that some of the inquiries have come from traditional funds rather than crypto-focused funds, but declined to name any of them.

“We’re talking about tens of millions (of dollars). It’s coming from a mixture of distressed debt funds, existing users of the platform, and investors in CoinFlex,” Lamb told CNBC.

Spat between CoinFlex and ‘Bitcoin Jesus’

The spat between Lamb and Ver marks the latest saga in the crypto market amid a slump in digital coin prices.

Lamb said this week that Ver has been served with a notice of default. The CoinFlex CEO told CNBC that the goal is to “continue to talk with him (Ver) and resolve this amicably.” However, Lamb said there are other routes for legal recourse.

“We also have an obligation to go through the appropriate legal channels as well,” he said.

The agreement between CoinFlex and Ver meant that if the investor failed to meet a margin call, then his positions would not be automatically liquidated as would normally be the case.

A margin call is a situation in which an investor must commit more funds to avoid losses on a trade made with borrowed cash.

Lamb said that CoinFlex felt comfortable to go into such an agreement because of the “data we’d seen around his capitalization.”

But CoinFlex will now be eliminating such agreements, Lamb said.

“In hindsight, having no non-liquidation agreements would have definitely been better,” Lamb said.

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Major crypto lender Celsius freezes withdrawals as markets tumble

LONDON, June 13 (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.

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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. read more

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. read more

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%.

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Reporting by Tom Wilson in London, Abinaya Vijayaraghavan in Bengaluru and Alun John in Hong Kong; Editing by Bradley Perrett and Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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Crypto lending platform Celsius pauses withdrawals amid ‘extreme market conditions’

Crypto lending platform Celsius Networks LLC said Sunday it is pausing all withdrawals, swaps and transfers between accounts, “due to extreme market conditions.”

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the New Jersey-based company said in a statement.

Celsius is one of the largest crypto lending companies in the world, at one point claiming more than $20 billion in assets. But it has also run afoul of regulators, and some users have recently blamed Celsius for steep financial losses for encouraging them to hold its CEL digital tokens as collateral for loans — CEL plunged 48% late Sunday and has lost more than 75% of its value over the past month, and 97% over the past year, according to CoinGecko data.

From May: Celsius faces a revolt as a high-yield crypto plummets

The wider cryptocurrency space has been slammed this year, with the total crypto market down more than 40% over the past two months. Bitcoin
BTCUSD,
-5.39%,
for example, slid to an 18-month low Sunday and has lost 45% of its value year to date; it’s off more than 60% since its all-time high-water mark last November.

“We understand that this news is difficult,” Celsius said Sunday. “We are working with a singular focus: to protect and preserve assets to meet our obligations to customers.”

Celsius said its operations were continuing, but that there was “a lot of work ahead  as we consider various options.”

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