30 Days to Exit Celcius from the Storage Service Provider Prime Trust

30 days to exit Celcius from the Storage Service Provider Prime Trust

Custodian Prime Trust has asked cryptocurrency lending platform Celsius Network to exit its platform and has given 30 days to do so. According to a source with knowledge of the matter, Prime Trust’s risk management team is annoyed by Celcius’ perpetual and perpetual mortgage policy.

Prime Trust company, which provides financial infrastructure solutions and custody services, has terminated its contract with Celcius Network, and it is stated that the API entry will be closed after the expiration of the sent notification period:

We have terminated our partnership with Celsius Network for various business factors. This relationship lasted just 12 months. We would not comment other than to wish Celsius the best of luck in its endeavours,

Celcius Network is working as a bank lending the deposits it receives in cryptocurrency to other customers in crypto money and dollars. Borrowers also use other crypto units as collateral. Celcius has been working with Prime Trust to keep some of its clients’ funds since March 2020.

Perpetual mortgage bothers the risk team.

Someone who knows the situation, who did not want to be named, stated that Prime Trust’s risk team was uncomfortable with Celcius’s policy of continuous and unending mortgages.

rehypothecation, a practice in which banks and brokerage houses use assets held as collateral by their clients for their own purposes, is the reutilize of collateral from a lending transaction to finance overdrafts and can result in losses misused. This is why it is seen as a dangerous monetary policy. It is also stated that criticism has been made to Celcius on this issue before.

Response from Celcius: Prime Trust was not of the expected quality.

Celcius responded to the issue in a short time. A spokesperson said in a statement that they denied the re-mortgage claims:

Since Celsius began offering its services to residents of New York, it has never re-displayed its crypto assets. Unfortunately, the level of service provided to our NY users through our partnership with Prime Trust was not at the level Celsius users are accustomed to, and we are therefore proceeding with an alternative solution for our New York State users.

Celcius’ terms of service state that the company can lend, invest, mortgage, sell and use assets. In addition, while informing that some selected assets may be held with counterparties, it is stated that:

May dispose of qualified digital assets or hold eligible digital assets with counterparties, and we will do our best commercial and operational efforts to prevent losses.

Another company that Celcius gets custodian services from is Fireblocks, where he parted ways with Prime Trust. Celcius has been working with Fireblocks since 2019.

Fireblocks CEO Michael Shaulov said in a statement that:

As a non-custodial technology provider, we do not dictate or interfere with our customers how they do their business,

SEE ALSO: Key Features of A Forex Technology Provider You Should Consider

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