The crypto lender Celsius Network’s shock announcement that it’s freezing withdrawals sparked a rush by companies in the digital-assets sector to reassure markets about the health of their operations.
BlockFi, Nexo, Tron and Tether were among those that took to Twitter in the hours after Celsius’s announcement, which accelerated a crypto rout that erased more than $100 billion of market value. With memories of last month’s collapse of the Terra ecosystem still fresh, attention is turning to decentralized-finance projects that offer eye-popping yields as well as stablecoins billed as pegged to an asset like the U.S. dollar.
Zac Prince, chief executive of the crypto lender BlockFi, said its systems were operating normally and that it had “zero exposure” to assets such as a version of Ether (stETH) that had appeared to lose its peg to Ether over the weekend.
Our risk management systems are operating normally. We take no pleasure in cryptocurrency businesses struggling but will continue to operate with the upmost responsibility towards our clients and other stakeholders.
— Zac Prince (@BlockFiZac) June 13, 2022
That doesn’t mean BlockFi has been unscathed by the current crypto downturn. Hours later, Prince
Nexo, another competitor, went a step further in its efforts to project strength. The London-based company said it offered to buy Celsius’s “remaining qualifying assets” and followed by tweeting that it had sent a formal offer to Celsius.
Nexo is in а solid liquidity and equity position to readily acquire any remaining qualifying assets of Celsius, mainly their collateralized loan portfolio. We are putting together an offer to Celsius to that accord and will communicate it publicly. 5/
— Nexo (@Nexo) June 13, 2022
Celsius’s announcement compounded a crypto slump driven by expectations of higher interest rates following worse-than-expected U.S. inflation data on Friday. Bitcoin extended a seven-day decline by falling 15% to $23,250, the lowest since December 2020. Ether tumbled 18%, and altcoins like Solana and Avalanche suffered declines of similar magnitude.
Although stablecoins mostly weathered the selloff, they weren’t immune. The crypto entrepreneur Justin Sun’s newly launched algorithmic stablecoin USDD slipped to as low as 98.4 cents from its $1 peg, and was trading at 99.2 cents at 4 p.m. in London. Sun, the founder of blockchain network Tron, said the platform had added $700 million worth of USDC, another stablecoin, to reserves meant to serve as a backstop to the USDD peg.
Larger stablecoins like USDC and Tether are purportedly backed by dollars and dollar-equivalent assets. Tether, which operates an eponymous collateralized dollar-pegged stablecoin and is an investor in Celsius, tweeted a link to a
Tether was trading at its dollar peg on Monday afternoon after briefly slipping as much as 35 basis points, data compiled by Bloomberg show.
