'I trusted them with my savings:' Crypto investors scramble after accounts frozen
Months ago, Sydney, Australia-based Hamish Tipene took out two loans with Celsius Network. Buying a new home above his pre-approval rate, he staunchly supported the crypto lender’s motto “Unbank Yourself” and used his crypto holdings as collateral instead of selling it for cash.
But when the value of crypto started plummeting a week ago, the collateral Tipene put up for the loan rapidly dwindled and he received a margin call. He needed to add more collateral.
Before he could, Celsius froze Tipene's account, making it impossible to meet the margin call in time. The company liquidated 0.59 of one bitcoin, a value of $11,800 by today's rate. He now faces another margin call that would wipe out another $13,000 in bitcoin, but with his account still frozen he’s up against the same dilemma.
“I tried to reach them for days. You can’t remove someone’s ability to resolve a situation and then punish them for not resolving it,” the 46-year-old carpenter told Yahoo Finance. “I trusted them with my savings and it’s unfair.”
Last year, cryptocurrencies gave retail investors the chance to secure wealth at what seemed to many as a once-in-a-lifetime money-making opportunity. Now as the tide is pulling out for risk assets with cryptocurrencies hit especially hard, investors are rethinking their trust in some crypto firms, including Celsius Network, after the companies took drastic steps in the face of a liquidity crisis.
Crypto’s total market capitalization has dropped by over $237 billion since the release of May’s hot inflation data, from $1.15 trillion to $913 billion as of Monday morning but since its November peak the figure has lost 70% - over two thirds of its value - according to Coinmarketcap.
Accustomed to delivering high returns for investors and growth to shareholders during the bull market, industry players are now yanking back capital with several major trading venues, including Robinhood, Gemini, Crypto.com, BlockFi, and Coinbase, announcing significant layoffs.
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