Understanding the reasons for the anger of Celsius investors

Celsius Network is one of the giants in the field of crypto lending platforms. Crypto lending is a way to generate interest on your capital easily. Lending means "loan" in English. Thus, the concept consists of lending your cryptos and receiving in exchange the reimbursement with interest.

Celsius Network is thus one of the best-known and most used crypto lending platforms among crypto-holders. Celsius Network LLC is based in New Jersey and owns more than $11 billion in crypto assets, according to information released by the company.

However, in recent days, the storm has hit Celsius. Yes, it's a difficult year for cryptos this year 2022🥵.

Withdrawals, transfers and swaps are – for the moment – suspended. Obviously, this irritates the community to the highest degree.

Anger is rising and you will discover in this article the “reasons” for the anger.

The origin of the problems encountered by Celsius

Since the start of the year, the market has been under downward pressure. Bitcoin fell below $30,000 and the market experienced historic crashes marked by the disappearance of Luna. In this dramatic situation, this pushes some panicked customers to withdraw their funds. This is also what happened with Celsius Network customers.

Presumably, tensions on Celsius Network began with the fall of UST and Luna. Some clients who had deposited UST and Luna then lost their investments.

You should know that many lending platforms “lost” money with Luna. However, most were able to liquidate their positions before the big crash. Others simply refunded customers.

However, the problems instead began with the loss of the value of the CEL token.

The fall of the CEL token

Celsius issued its own token: the CEL. Since last month, the token has followed the bearish pressure of other altcoins. The CEL experienced a drop of more than 50% in its value. The most terrifying thing remains the fact that the token has lost 90% of its value compared to its peak last June.

For Celsius, management asked certain people who had borrowed (and deposited CEL tokens as collateral), to sell their CEL tokens if they were unable to deposit more CEL. This is a normal mechanism on lending platforms. So it's completely normal, somewhere.

However, the injunction to sell CEL tokens at such low prices turns out to be scandalous for many people. They have clearly lost a lot of money, that’s undeniable.

Investors complain that Celsius pushed them to buy these tokens (in particular to have higher interest rates). So, they complain about not having been able to sell their tokens at the right time. The market was not liquid at that time. They then had to get rid of their CEL tokens when they were no longer worth anything.

A disaster for many wallets therefore. See some investor comments in the screenshots below:

For these investors, it was Celsius’ duty to support the currency. Which they didn't do. The criticism of Celsius is essentially linked to the fact that Celsius did not know how to manage the crisis of the collapse of the UST.

Celsius, a company that will go out of business?

In fact, for the oldest, this story inevitably reminds us of the CRED affair. Cred was also a very well-known lending company a few years ago. It was even the number 1 platform before going bankrupt.

That said, Cred appears to have gone bankrupt due to poor cash flow management. Likewise, it appears that the founder has partnered with a notorious scammer. (You can read the article at Cred to find out what really happened).

Yes, yes, in the ruthless world of crypto, scammers, bullshitters and other impostors are legion, I'm not kidding you.

So, it is really too early to decide for Celsius...The problems are not of the same order (as far as we know.

The answers provided by Celsius

As with every crisis encountered by a platform, the first way to defend yourself is to invoke conspiracy theories. For example, the director of Celsius (Alex Mashinsky) said that these are people ( Whales of CEL) who are trying to bring down the company.

In fact, it should also be remembered that the American government is very interested in Celsius and other crypto lending platforms. We remember that the blockf (a competitor to Celsius) had to pay more than $100 million to SEC.

If Celsius were to pay such a fine, the company said it would be able to do so. Understand that the company does not have a cash flow problem. Thus, the company would also have a subsidiary of bitcoin mining. (This will be made public shortly according to the company).

Will this be enough to overcome the loss of investor confidence? Nothing is less certain.

Should we be worried about crypto lending platforms?

Frankly, whether it is lending on decentralized finance or on CeFi platforms, the risks are there. No matter what you want to do with your cryptos, if there is a return, there is a risk.

Cryptos are very volatile assets, as you know (and should know). This means that any actions you take with it will be subject to greater risk of loss.

Of course, when the markets are on the rise, everything is fine 😉 All the tokens increase in value and we tend to believe that we have found the goose that lays the golden eggs.

Stop fantasizing for too long. I'm going to give you a little advice that I already gave in a video on the 5 best crypto lending platforms on Youtube;

Our advice for optimizing your earnings with lending

The advice was to spread your investments across different platforms. Personally, I lend on DeFi as well as on CeFi. And, I use at least 4 platforms. I deposited BTC on Celsius (and nothing else) so I'm not worried that much.

I use other platforms like Youhodler ou Nexus also.

The other piece of advice we give you in the video is something that not many people will tell you. Try to avoid platforms that have their own tokens. In fact, by creating their tokens, platforms add additional risk of loss. You really need to be aware of this. This can be profitable in a bull market but when the market goes down, it becomes really dangerous for the platform.

In general, you are not advised to follow this advice because there are very few people who have in-depth knowledge of the mechanics of token creation.

Take this advice and do your own research as always.

Also be careful of platforms that are only intermediaries. They take commission from your winnings and only serve as intermediaries. Lending platforms are easy to use, you can do it yourself like a grown-up.

Here is the video to find out more.

#lending #zonebitcoin #lendingcrypto

You can also read the written version of the article: Top 5 of the best lending platforms.

Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.

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