Celsius Network co-founder Alex Masinsky took to Twitter over the weekend to be defiant. When a user asked him why he had so many enemies, Masinski boasted: “Because I won and gave everything to my community”. Days later, his crypto investment firm went into crisis after it blocked customer withdrawals, a move that shook the crypto market.

The abrupt halt in redemptions underscores the risks faced by investors flocking to complex digital asset products that offer high returns. Celsius claims to have 1.7 million retail customers, including in the US, UK and Israel, and has a reputation for making aggressive bets on depositors’ funds.

The investment group, which is largely unregulated outside of lending licenses in a handful of U.S. states, had grown to a whopping $24 billion in crypto assets under management last December. The inflow came shortly after it secured investments from Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest pension fund, and Westcap, a fund led by former Blackstone and Airbnb executive Laurence Tosi.

Celsius portrays itself as a simple company that helps everyday investors achieve “financial freedom” that cannot be achieved in mainstream finance.

“Crypto is the first time in history that the average Joe is ahead of Goldman Sachs and Morgan Stanley,” Masinski told the Financial Times in September.

However, Celsius’ woes lie in the complex, high-risk trades that are usually hidden inside Wall Street.

Founded in 2017, the group has emerged as one of the most prominent companies in the recent cryptocurrency bull run, offering an astonishing yield of up to 18% to customers who deposit digital assets. Similar to the way banks count deposits as liabilities, Celsius customers are unsecured lenders, although in the lightly regulated cryptocurrency world, their funds have no government-backed insurance.

Celsius uses the deposits for loans from major cryptocurrency market makers and hedge funds, as well as for so-called decentralized finance projects. Some players in the market have a policy of not extending credit to Celsius even if they borrow money, according to people familiar with the matter.

Celsius has been hit with withdrawals as cryptocurrency prices plummeted this year, with withdrawals from the platform totalling $2.5 billion since March. In May, the company’s assets were just $12 billion, half of what it was at the beginning of the year. It subsequently stopped disclosing total assets under management; however, CDPQ told the FT that Celsius had experienced “substantial withdrawals” from customers in recent weeks. Celsius did not respond to a request for comment on Monday.

In recent months, the cryptocurrency lender has also been challenged by regulators in several U.S. states, arguing that its deposit accounts are unregulated securities. In April, Celsius said it had been in “ongoing discussions with U.S. regulators” so it would halt new deposits from U.S. retail investors to its yielding accounts.

The final squeeze happened in the past week, and Celsius created a severe liquidity mismatch. The company borrowed ether, a major digital coin, from users and then locked the huge asset indefinitely in a new version of the cryptocurrency, which is currently under construction and has experienced delays. Locking up ether in the new version has a reward that will eventually be released.

Celsius locks up ether directly, but also issues a derivative of locked ether through a service called Lido, called “staking ether” or stETH, which is meant to be easily traded and seen as the one-to-one equivalent of ether itself. It used that stETH as collateral for further borrowing, posting $450 million worth of funds on a platform called Aave, according to public blockchain data.

Holders of stETH sold derivatives last week amid concerns over a delayed launch of the new ethereum network, the main digital ledger for ether transactions. Crypto analysts say the sell-off has drained liquidity in the main trading pool for derivatives, leaving Celsius unable to swap its stETH for regular ether to meet customer withdrawal requests without incurring huge losses.

Complicating the challenge is that if the price of stETH continues to fall, it may be forced to provide additional collateral on Aave or liquidate its borrowings.

The group said on Monday that it was suspending the exit due to “extreme market conditions” and said the decision was made to allow Celsius “to better meet its exit obligations over time.”

The company’s own crypto token, CEL, plummeted to just 30 cents after recent troubles. In June last year, it was trading near $8. The broader cryptocurrency market has also been hit by the Celsius issue, with bitcoin down about 25 percent since Friday to trade below $23,000.

USD per coin line chart shows Celsius coin value plummeting

Celsius has managed to shake off previous tensions, all of which have been detailed by a growing number of online critics who have been warning of the risks Celsius is taking for months. Among them is CJ Block, an American blogger who writes under the pseudonym Mike Burgersburg, and Cory Klippsten, a bitcoin entrepreneur.

“They put their money into all kinds of risky bets . . . at best, they’re like a hedge fund using retail money,” said Block, who recently finished medical school and spent months using Blockchain data analyzes Celsius’ positions.

In May, Celsius withdrew $500 million from the Terra ecosystem shortly before its collapse, prompting a rush to withdraw the terra stablecoin and its associated Luna token. The company went through a rough patch last year when it lost 900 bitcoins, which were deposited in a crypto business called Badger DAO, before being hacked. Celsius also held a large amount of stETH issued by another company, Stakehound, which became almost worthless when Stakehound lost the keys to the underlying ether.

Max Boonen, founder of cryptocurrency broker B2C2, likens cryptocurrency lenders to banks, which must carefully match their assets and liabilities to remain solvent.

“Banks have learned from past crises and are now very cautious and sophisticated about their asset-liability mismatches. It’s a skill, and I don’t know to what extent the crypto lending market has learned it,” he said.

Additional reporting by Josephine Cumbo