The crypto world is in a deep freeze

The latest phase of the cryptocurrency crisis began last week when Celsius, a crypto bank, froze withdrawals and transfers for seven days. This has led to many questions about how much money users actually have in their accounts. The answer seems clear: you have $1,000. You can withdraw that money and spend it as you see fit. Of course, it may be invested in some esoteric cryptocurrency with a fluctuating value, and you may have to pay a fee to turn your $1,000 of play money into cold, hard cash, but you can treat your balance as something like money in your pocket. However, now that Celsius has blocked users from accessing their funds, the answer is less clear. One possible answer is that the money is just resting in your account and though you can't reach it, you definitely have it. Another possible answer is that you have lost all of the money in your account. What's at stake? Neither of those answers are satisfying because valuing illiquid holdings is genuinely hard. It's easy to treat money you can't access right now as the same as money you can while the times are good but when things get tricky the difference becomes stark and you have entered a liquidity crisis. This problem isn't affecting only depositors; it is also the main problem for Celsius itself. The crypto bank has a lot of money locked up in a convoluted crypto derivative called stETH which they cannot get out due to the current state of affairs