Celsius Network amassed more than $20 billion in assets with a pitch that seemed to defy the basic physics of finance. Deposit crypto coins and earn interest rates as high as 18%, tens or hundreds of times the rates on traditional savings accounts. “When you look at what the banks pay, you say to yourself, ‘Somebody is lying. Either the bank is lying or Celsius is lying,’” co-founder Alex Mashinsky said in an interview last year.
More than a million people entrusted their savings to Celsius, according to the company. Even as skepticism mounted over whether its interest rates were sustainable, and customers started withdrawing hundreds of millions of dollars amid a deepening crypto rout, Mashinsky maintained that his company was safe. Then, on the night of June 12, Celsius announced it was halting withdrawals because of “extreme market conditions.” It was like a bank locking depositors out of its branches to preserve cash in the midst of a panic. “We are working with a singular focus: to protect and preserve assets to meet our obligations to customers,” Celsius said in a post on Medium.