Three days after crypto lender Celsius abruptly announced that it would pause all customer withdrawals, exchanges, and remittances, the struggling company’s CEO, Alex Mashinsky, has finally broken his silence on the matter.
But Mashinsky offered little consolation to those hoping for answers as to when users will be able to withdraw funds again.
Mashinsky took to Twitter this afternoon, speaking publicly for the first time since his company froze withdrawals Sunday night, to reassure the Celsius community that the company’s team is working on the issue “non-stop” and to urge customers for more asking for patience.
Notably, Mashinsky did not provide an answer as to when he intends or expects to bring Celsius back into service. Twitter users soon after asked the embattled CEO for assurances on customer deposit safety, but Mashinsky didn’t respond further.
Celsisus suspended payouts on Sunday to “stabilize liquidity” and “preserve and protect assets” after irregularities emerged in a particular cryptocurrency offered on the platform, Lido’s staked ether (stETH).
stETH, which represents Ethereum tied to the Ethereum 2.0 beacon chain (which will eventually merge with the Ethereum mainnet), is said to be tied to the value of ETH. Because of this, stETH is often used as collateral on platforms like Celsius to borrow ETH.
But as other crypto markets broke apart, stETH recently lost its peg to wildly volatile ETH. In order for customers to withdraw ETH, Celsius would sell its stETH stores. If a large number of clients concerned about the recent depegging provision pulled out, such an event would force Celsius to sell massive chunks of its $472 million StETH offering. That would further lower the price of stETH and almost certainly not provide the company with enough liquidity to cover its ETH obligations to customers.
It is unclear how Celsius will fix the issue if stETH remains pegged from ETH (at the time of writing, stETH is currently trading at 0.93 ETH). Today the company has reportedly hired lawyers to consider restructuring the company if no other sources of funding can be found.
On Sunday, the news of the withdrawal halt caused Celsius’s native token to plummet 70% in an hour. Just a day earlier, Mashinsky tweeted much more generously, berating a Twitter user for spreading “fear, uncertainty and doubt” when citing rumors that retail investors were being locked out of Celsius accounts:
The situation appears to have taken Celsius leadership completely by surprise, and it remains unclear when and if a plan to fix it will be released.
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