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Freeway, a crypto lending platform, has halted withdrawals
Once again, a cryptocurrency lending platform has prevented customers from accessing their funds by suspending withdrawals.
By: Flagship Team
This time, the company in question is the staking platform Freeway, which asserts that one of its trading strategies has utterly failed.
This is the justification given for the most recent suspension of customer withdrawals.
Clients Are Denied Access to Their Money
In fairness, this isn't the first time this has come up in the crypto space over the past few months, but it is the first time a company seems to be taking responsibility for the outcome.
One of Freeway's investment strategies reportedly failed. Companies implementing withdrawal halts have typically explained that they did so due to ongoing market speculation and volatility.
Celsius, the now infamous cryptocurrency lending platform in the news for the past several weeks, is one of the most prominent examples of a withdrawal freeze this year.
When Celsius suddenly stopped processing withdrawals during the summer, its customer's and outside observers' eyebrows were raised in disbelief and disgust.
But Celsius didn't stop there; it fanned the flames by announcing it would be filing for bankruptcy, shielding its executives from legal action by angry customers, lenders, and anyone else with financial stakes in the company.
Alex Mashinsky, the company's CEO, has announced his resignation and departure, and Celsius has stated it is putting a plan in motion to ensure all customers receive their due funds.
However, no firm timeframe has been established.
Freeway stated in its official statement:
“The trading strategy was executed as it was programmed, but the market volatility caused a spike in margin utilization leading to the loss.”
The “supercharger,” a product with a high yield for the company, is at the heart of the withdrawal freeze.
As of this writing, few specifics are available beyond a Twitter post from Freeway saying that the product's associated trading strategies have seen significant losses.
Many investors have lost money due to this, which has hurt the company's portfolio.
The company elaborated on its initial statement by saying:
“In order for us to resume Supercharger buy-backs, we need to be [able] to execute safely. We will therefore need to see significant inroads into the losses before that can happen, and that will take time.”
Exceptionally High Yield
It was claimed that users of the Supercharger saw an average annual yield of about 43%.
Since 43 percent is exceptionally high for a cryptocurrency exchange, this should have rung alarm bells for most traders.
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