Community backlash against Celsius’ HODL Mode

Crypto lender Celsius Network has received more criticism over the weekend due to an account security feature that makes withdrawals more difficult.

"Involuntary HODL Mode"

HODL Mode is a security feature that provides Celsius Network account holders with the ability to temporarily disable outgoing transactions. According to the Celsius website, this feature means the user will not be able to withdraw funds, send funds via CelPay or change whitelisted withdrawal addresses for 24 hours after the feature has been deactivated.

According to user reports on Twitter over recent days, it appears that the feature has now been applied to accounts involuntarily.

A tweet by one user, @WallStreetPro,  stated: “You learn something new everyday. ‘HODL Mode = ‘Your Account is Frozen’”. Included in the tweet is a screenshot from their Celsius account with a notice stating “Your account was set to HODL Mode by our team”.

In a further update, the claim is made that although Celsius states that “You control when HODL Mode is activated”, the company is activating the mode without user consent. The user alleges this is to limit capital outflows rather than to provide additional security for account holders. Celsius founder & CEO, Alex Mashinsky responded directly, stating:

“You know what HODL Mode is and how it helps protect users. Despite that you are using fear and hate to scare Celsians.”

WallStreetPro is known on Twitter for sending out antagonistic tweets against crypto companies, but other Celsius account holders have criticized the company for the difficulty involved in getting the restriction lifted. One claimed to be waiting more than 12 days to have the security measure removed, deeming this to be “an unacceptable length of time”.

Ongoing controversy

This recent controversy comes hot on the heels of the publication of a report that places Celsius as one of seven key wallet holders that played a significant part in the recent collapse of algorithmic stablecoin, UST.

The report into the downfall of Terra by analytics firm Nansen was released on Friday. In it, researchers claim that seven wallets triggered the UST depeg. Nansen labeled one of the wallets identified as belonging to Celsius. The report’s findings contradict earlier claims that just one or two attackers led to UST’s downfall. “We refute the popular narrative of one ‘attacker’ or ‘hacker’ working to destabilize UST”, the report stated.

As the Terra meltdown unfolded, there were concerns initially that Celsius could have been financially impacted, but it appears that the savings app managed to sell off its Terra-related holdings prior to the price plummeting.

Earlier this month, Celsius announced plans to seek a public listing for its crypto mining business. That news had been accompanied by calls for holders of Celsius’ native CEL token to be rewarded as part of the IPO. The value of the token has fallen dramatically over the course of the past year.