It’s happened again, folks. Another digital currency exchange has decided to halt all withdrawals, thus preventing its customers from gaining access to their assets. This time around, the company in question is staking platform Freeway, which says one of its trading strategies has failed miserably. This is the reason it’s cited for its recent halting of customer withdrawals.
Freeway Prevents Customers from Accessing Their Funds
This has been a common theme in the crypto space over the past several months, though to be fair, this is the first time where a company appears to be blaming itself for the outcome. Freeway is saying one of its investment strategies didn’t work. In most other cases, the companies that engaged in withdrawal halts said they did so because of ongoing market speculation and volatility, and this was the only way they knew to protect themselves.
One of the biggest examples of withdrawal halts this year came through Celsius, the now notorious crypto lending platform that has been in the news for the past several weeks. Celsius initially halted withdrawals over the summer, causing all its customers and outside viewers to raise their eyebrows in disbelief and disgust.
However, things didn’t quite stop there, and Celsius later added fuel to the fire by announcing it was going to be filing bankruptcy, thus preventing angry customers, lenders, or anyone else who had money wrapped up in the company from taking legal action against executives to get their money back.
The CEO of the firm, Alex Mashinsky, has since announced he’ll be resigning from his post and departing from the company, and Celsius has stated it’s putting a plan in motion to ensure all customers receive their due funds, though a timeframe has not been set in stone.
In a statement, Freeway announced:
The trading strategy was executed as it was programmed, but the market volatility caused a spike in margin utilization leading to the loss.
The withdrawal halt centers around the company’s high yield “supercharger” product. At the time of writing, details are relatively scarce, with Freeway announcing on Twitter that one of the trading strategies associated with the product has resulted in a high level of failure. This, apparently, has negatively impacted the portfolio of the company and resulted in losses to many investors.
The company continued its statement with:
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.
Very High Yield
Supercharger was alleged to have provided users with roughly 43 percent annual yield.
This likely should have been a red flag for most traders given that 43 percent is an unusually high number for a crypto platform.