Midas Investments announced the closure of its DeFi solution as the FTX and Celsius contagions and other devastating events so far in 2022 made it impossible to continue normal operations.
Midas Investments calls it quits
Midas Investments, a platform that enabled users to earn passive income on their crypto holdings via DeFi yields, has announced shutting down its businesses due to unforeseen circumstances beyond its control.
In a blog post by CEO Trevor Levin on Dec. 27, the project revealed that it suffered a cumulative loss of $50 million due to the collapse of the centralized crypto lender, Celsius and the failure of Sam Bankman-Fried’s FTX exchange, representing about 20% of its $250 million worth of assets under management (AUM).
Trevor claims the fear, uncertainty, and doubt (FUD) created by the Celsius and FTX debacle further triggered massive fund withdrawals (over 60% of its AUM) from its platform by investors, resulting in a large asset deficit.
“On December 27th at 11:00 AM UTC, we will disable deposits and swaps on our platform. Withdrawals will be disabled for 2-3 hours while we ensure that calculations and balance adjustments have been made correctly. Once this is done, you will be able to withdraw the remaining assets from the platform, with any rewards earned being deducted from your balance.”
Trevor Levin, CEO of Midas
Importantly, the Midas team made it clear that investors will only be able to withdraw about 45% of their assets as it plans to “adjust user balances by balancing remaining liabilities in BTC, ETH and stablecoins with remaining assets, deducting 55% and rewards earned.”
However, users whose balances are lower than $5k will not be affected by Midas’ rebalancing system, but their earnings will be deducted.
Midas plans to float a new product based on centralized, decentralized finance (CeDeFi) in early 2023. The team claims its proposed solution will be designed to offer both CeFi and DeFi users “scalable, on-chain, verifiable, tokenized CeDeFi strategies.”
In related news, FTX investors have filed a lawsuit against the collapsed project, requesting the U.S. bankruptcy court to prioritize their total reimbursement before settling non-customer creditors.
Source: https://crypto.news/ftx-and-celsius-contagions-force-midas-investments-shut-down/