The Celsius Network, which has 1.7 million customers, said on Monday “extreme market conditions” had forced it to temporarily halt all withdrawals, crypto swaps and transfers between accounts.
“We are taking this necessary action for the benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets,” the company said in a blog post.
The UK-registered company has about US$3.7 billion ($5.3 billion) in assets, according to its website. It pays interest on cryptocurrency deposits, and loans them out to make a return.
The cryptocurrency market has taken a hammering in recent months after its pandemic boom turned to bust.
As the world’s major central banks have hiked interest rates to tame spiralling inflation, traders have rushed to ditch riskier investments, including their volatile crypto assets.
Ether, the second-most-valuable digital coin, has fallen 27 per cent since Saturday, and has lost more than 70 per cent of its value since November.
So-called “stablecoins” — cryptocurrencies that are tied to the value of more traditional assets — have also taken a hit.
Tether, a popular stablecoin, broke its peg to the US dollar in May, puncturing the view that it could serve as a hedge against volatility.
TerraUSD, a riskier algorithmic stablecoin that used complex code to peg its value to the the US dollar, collapsed the same month, wiping out the savings of thousands of investors.
The coin was valued at a little over US$18 billion ($25.8 billion) in early May before it crashed, according to data from CoinMarketCap.
Celsius Network did not say when it would allow customers to withdraw their deposits again, only that it would “take time”.
Meanwhile, governments are watching the fallout of the crypto crash closely and could move to protect investors.
“There are many risks associated with cryptocurrencies,” United States Treasury Secretary Janet Yellen told the Senate last month.
She said her department was due to release a report on the matter.