It happened again guys. Another cryptocurrency exchange has decided to stop all withdrawals, thus preventing its customers from accessing their assets. This time, the company in question is making a bet on the Freeway platform, which says that one of its trading strategies has failed miserably. This is why it has been cited for stopping customer withdrawals recently.
The highway prevents customers from accessing their money
This has been a popular topic in the crypto space over the past several months, though to be fair, this is the first time the company seems to blame itself for the outcome. Freeway says one of its investment strategies hasn’t worked. In most other cases, companies that engaged in stop-loss operations said they did so because of speculation and the constant fluctuations in the market, and it was the only way they knew to protect themselves.
One of the biggest examples of pullback stops this year came through Celsius, the now infamous crypto lending platform that has been in the news for the past several weeks. Celsius initially halted withdrawals over the summer, causing all of its customers and outside viewers to raise eyebrows in disbelief and disgust.
Things didn’t quite stop there, however, and Celsius later added fuel to the fire by announcing that it would file for bankruptcy, thus preventing angry customers, lenders, or anyone else with money wrapped in the company from taking legal action against the executives to get their money back.
The company’s CEO, Alex Machinsky, has since announced that he will be resigning from his position and leaving the company, and Celsius has stated that it is putting a plan in place to ensure all customers get their money owed, though no time frame has been set in stone.
In a statement, Freeway announced:
The trading strategy executed as programmed, but market volatility caused a huge spike in margin utilization resulting in a loss.
The withdrawal moratorium 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 trading strategy associated with the product has resulted in a high level of failure. Obviously, this has negatively affected the company’s portfolio and led to losses for many investors.
The company continued its statement with:
For Supercharger buybacks to appeal, we have to be [able] to implement it safely. So we will need to see a significant breakout of losses before that happens, and that will take time.
Very high productivity
Supercharger allegedly provided users with about 43 percent annual revenue.
This is likely a red flag for most traders given that 43 percent is an extraordinarily high number for a crypto platform.