How Celsius Network Collapsed and the Rise of New Alternatives

A Quick Overview of the Celsius Network

Celsius Network was launched in 2017 and positioned itself as a leading centralized finance (CeFi) lending platform and championed the “unbank yourself” movement.

It attracted millions of crypto holders and retail investors by offering up to 17% APY on deposits and charging no fees. Interest was paid to users in its native CEL token, which incentivized holding and drove up the token’s value.

Why the Celsius Network Crypto Lending Platform Failed?

The crypto market crash of 2022 cannot be attributed to a single event but rather to a series of interconnected occurrences. Globally, central banks raised interest rates to combat escalating inflation. This shift in monetary policy deterred investors from purchasing cryptocurrency assets, prompting them to favor safer and higher-yielding alternatives instead.

Then in May, Terra-Luna collapsed. Two algorithmic stablecoins, TerraUSD (UST) and LUNA, were designed to peg to the U.S. dollar. However, unlike regular stablecoins, UST and LUNA were not backed by physical dollar reserves but rather a “mint and burn” mechanism.

Inflationary pressure sent the stablecoins into a death spiral. While UST was de-pegged, the value of LUNA dropped to nearly zero, which wiped out approximately $60 billion in market capitalization.

How Celsius Was Impacted

The platform used risky investments and created asset-liability mismatches to pay customers the promised returns. When they were unable to meet the high volume of withdrawal requests, they froze all customer withdrawals, swaps, and transfers. This impacted approximately $4.7 billion of customer funds.

A month later, the network filed for Chapter 11 bankruptcy, citing a balance sheet deficit. The company’s CEO was also deemed to have engaged in deceptive practices, including withdrawing $8 million before the withdrawal freeze. He was later charged with fraud and sentenced to 12 years in prison.

Bankruptcy proceedings continued for over a year and led to the creation of a restructuring plan and a partial repayment of their creditors. The platform was finally shut down in 2024.

This left the users of the platform searching for a viable alternative, and we have the perfect active platform for you.

How Crypto.com helps users earn crypto rewards

Crypto.com is one of the best crypto exchanges available for both everyday and professional traders. The platform supports more than 400 cryptocurrencies and offers diverse services, including staking, an NFT marketplace, and a DeFi Wallet.

Their popular Crypto Earn program enables users to earn passive income on their crypto holdings. Through the mobile app, users deposit funds for a set period and collect regular interest payments. Returns are based on several factors, including the type of cryptocurrency, the lock-up period’s duration, and the user’s holdings of the platform’s native token, CRO.

The platform holds industry-leading security certifications and stores 100% of user crypto funds offline in cold storage for maximum protection. US users benefit from FDIC insurance for US dollar balances.

Their commitment to global regulatory compliance is demonstrated by their availability in over 100 jurisdictions. The exchange requires a mandatory Know-Your-Customer (KYC) process to create an account. These factors make it a suitable choice for all types of traders.

Final Thoughts: Is Crypto.com Worth It?

Celsius Network attracted millions of users with high-yield returns and easy crypto-backed loans. However, the 2022 market crash exposed the platform’s risky, leveraged strategies that ultimately led to its collapse and highlighted the dangers of unsustainable yield models in centralized lending.

Crypto.com is a forward-looking alternative offering crypto trading, staking, and many other services. The platform maintains strong regulatory compliance, and its operations are transparent. It’s a solid alternative, but don’t take our word for it; try it for yourself.