Due to “extreme market conditions,” leading crypto lender Celsius suspended withdrawals and transfers on Monday. Cryptocurrencies continued to fall sharply over the weekend, with bitcoin trading at its lowest level since December 2020.

Celsius Network is a decentralized finance platform that offers customers high yields for token deposits, which it lends to other crypto companies. As of May 17th, The Wall Street Journal reported that Celsius managed $11.8 billion in assets while serving 1.7 million users. 

Celsius said they were making the move for the benefit of their whole community in order to stabilize liquidity and operations. As digital assets tanked over the weekend, the major crypto lender banned all withdrawals, swaps, and transfers between accounts.

Bitcoin plunged more than 22% from its late Friday high, while cryptocurrencies as a whole fell as investors pulled away from riskier assets. For the first time since February 2021, the crypto market has slipped below $1 trillion in market value.

In a blog post on Monday, Celsius said, “Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps and transfers between accounts.” 

“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets,” it added.

In April, Celsius came under regulatory pressure and stopped offering interest-bearing accounts to nonaccredited investors in the U.S. 

Some market observers claimed Celsius also played a role in the collapse of the algorithmic stablecoinTerraUSD and its sister token Luna last month, which Celsius disputes.

After the Luna and Terra collapse in May, this Celsius freeze reignites investor concerns about the safety of crypto markets since Celsius is used by many crypto investors for staking and liquidity.

According to CoinMarketCap data, Celsius’ token, CEL, dropped 49% in the wake of the news about the stoppage, trading at 20 cents on Monday.

The news weighed even more heavily on the broader crypto market, with Bitcoin, Ether, Cardano, Solana and Dogecoin all falling substantially over the weekend.

CoinMarketCap recorded that Bitcoin fell to its lowest level since December 2020 on Monday, trading below $25,000 at one time. Meanwhile, ether fell 15.8% to $1,234.93, marking the biggest one-day drop in a year.

According to GlobalBlock strategist, Marcus Sotiriou, the crypto sell-off is being fueled by investor concerns about the Federal Reserve’s projected interest-rate hikes to combat red-hot inflation. 

“I think this is a bigger contributor to the decline we have seen, as it results in a more hawkish Federal Reserve they are now forced to remove more liquidity from the market in order to bring down inflation. When liquidity is removed, risk-on assets are hit the hardest, which includes crypto,” Sotiriou said.

Inflation in the United States reached 8.6% in May, the highest level since December 1981, according to data released on Friday, which could prompt the US Federal Bank to act more aggressively.

Although Celsius did not give an exact timeframe, the company said it hopes to lift the freeze as soon as possible adding, “There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”