As leading cryptocurrencies nosedive, investors of DeFi (decentralised finance) platforms also need to exercise "caution and scrutiny" amid growing concerns about the liquidity of this certain type of cryptocurrency service, experts warned on Monday.
The warning came as Celsius Network, a DeFi platform and one of the largest crypto lenders, announced that it was "pausing all withdrawals, swap, and transfers between accounts" for its 1.7 million clients.
"The wider crypto ecosystem has been rocked again - not by 'real' cryptocurrencies like Bitcoin, but by DeFi," said Nigel Green, CEO of deVere Group, one of the world's largest independent financial advisories.
"The unprecedented move by Celsius is effectively blocking clients from accessing their assets which will do little to quell fears from critics that some DeFi platforms could be Ponzi schemes," he noted.
Celsius Network said in an email to customers late on Sunday that due to extreme market conditions, "we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations."
Celsius operates in much the same way as a bank, but rather than in fiat money it does so in cryptocurrency. It collects deposits and then loans them out.
"There are legitimate and serious concerns about networks' high yields, links to failed dollar-pegged stablecoin Terra, and reserves," said Green, urging people to exercise caution and scrutiny on crypto lending firms which offer clients lucrative double-digit yields on assets like Bitcoin and Ethereum.
The DeFi lending giant Celsius halting withdrawals has weighed on the broader crypto sector with Bitcoin, the world's largest digital token plunging to the lowest in 18 months in Asia trading on Monday.
Decentralised finance or DeFi offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a Blockchain.
--IANS
na/shb/
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app