Crypto Lender Platform Freeway Suspends Trading Services, Token Drops
Crypto investment platform Freeway has suspended access to yield-generating lending products to its clients, the firm said on Sunday, the latest indication of stress in the cryptocurrency sector.
Freeway, a crypto lending business that offers interest-bearing cryptocurrency accounts, announced late Sunday night that it has suspended trading services for its users due to extreme market conditions.
Freeway said the move was due to the ongoing extraordinary volatility in the currency and cryptocurrency markets and said it will now focus on ensuring the sustainability of the business. The lender said it has therefore decided to diversify its asset base to manage exposure to future market swings and volatility to ensure the ecosystem’s long-term sustainability and profitability.
The announcement has triggered a significant drop in the value of the original token. Freeway Token (FWT) has plunged more than 80% in the last 24 hours, and users on the Telegram community do not understand what is really going on. At the time of writing, the Freeway token was trading at $0.001498, down 76.41%, according to CoinMarketCap. Freeway responded that it will notify its customers when it is ready to resume trading services.
With this, Freeway joins major crypto lending platforms such as Voyager Digital, Celsius Network LLC and Babel Finance, among others, in suspending trading and withdrawals. Like the firm, other platforms that suspended withdrawals to users cited facing “unusual liquidity pressures” as the reason for freezing operations.
In the past, digital asset values have fallen in response to the US Federal Reserve raising interest rates to keep rising inflation under control, thereby draining excess liquidity from the market.
The many cases of crypto lenders being brought down by the rising prices of crypto point to cryptocurrencies being a highly leveraged asset class. In June, Singapore-based hedge fund Three Arrows Capital (3AC) saw its assets under management plunge by over 70% due to its heavy investments in the collapsed TerraUSD stablecoin. This led to a ripple effect that caused Voyager Digital, Celsius Network and many others to suspend trading, deposits and withdrawals.
As a result, several regulators are considering introducing additional consumer protections. In July, the Monetary Authority of Singapore proposed new rules such as setting limits on retail participation and norms for the use of leverage in cryptocurrency transactions.
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