Celsius Network

Celsius Network's July 2022 bankruptcy destroyed a crypto lending platform that had managed over $10 billion in customer assets. The company offered high interest rates on cryptocurrency deposits by lending those assets to institutions and DeFi protocols. When crypto markets crashed and borrowers defaulted, Celsius couldn't meet customer withdrawal requests—a classic bank run accelerated by crypto's 24/7 markets and lack of circuit breakers. The mechanism failure was risk concentration without reserves. Celsius paid 17%+ yields on customer deposits, which required taking corresponding risks in lending. When Terra/Luna collapsed and crypto markets crashed, Celsius's loan book deteriorated faster than it could liquidate positions. The company froze withdrawals in June 2022—trapping $4.7 billion in customer funds—and filed bankruptcy weeks later. Celsius demonstrated that crypto lending platforms faced the same risks as traditional banks (liquidity mismatches, credit risk, duration risk) without the same protections (deposit insurance, central bank backstop, regulatory oversight). CEO Alex Mashinsky had positioned Celsius as an alternative to traditional banking; it turned out to be traditional banking without safeguards. Mashinsky was later charged with fraud.