Midas, a Crypto Platform, Ceases Operations Due to “Significant Deficit,” Users to Receive 45% of Assets
Midas.Investments, a cryptocurrency investment platform, has become the latest victim of the ongoing crisis surrounding centralized yield providers in the industry. Despite having $250 million in assets under management as recently as the Spring of 2022, the platform will now cease operations due to a significant asset deficit.
Midas offered users the opportunity to earn interest on various cryptocurrencies through its platform. By implementing different strategies that combined centralized finance (CeFi) and decentralized finance (DeFi), the platform was able to generate interest for its users. For example, its DeFi YAP strategy allowed users to gain exposure to top DeFi tokens.
In a blog post and video released on Tuesday, Midas CEO Trevor revealed that the company’s DeFi portfolio had incurred a cumulative loss of $50 million. This loss represented approximately 20% of the company’s assets at that time.
The situation was further exacerbated by the recent collapse of centralized lenders like Celsius and FTX. As a result of the mass exodus from centralized platforms, Midas experienced a withdrawal of 60% of its assets, resulting in a substantial deficit. Additionally, the company suffered a loss of $58.5 million due to various DeFi-related security breaches and overpayment of interest in its native MIDAS token.
According to the latest report, Midas currently has $115 million in liabilities, while holding only $51.7 million in Bitcoin, Ethereum, and stablecoins. This leaves a deficit of approximately $63.3 million, which will be used to reimburse customers.
Instead of subjecting users to a lengthy bankruptcy process that could take years for them to recover their assets, Midas has decided to take matters into its own hands. The platform will rebalance users’ portfolios by deducting 55% of the available balance and rewards earned. After this deduction, users will be able to withdraw 45% of the value of their portfolios. It is important to note that users with less than $5,000 in deposited assets will only lose their earned rewards, while all users will be able to immediately withdraw the remaining amount in their wallets.
Meanwhile, Midas plans to pivot its focus towards developing a new product that incorporates both DeFi and centralized decentralized finance (CeDeFi) business models. This new venture will integrate with the MIDAS token, which has experienced a 99% decline in value following the shutdown of Midas.Investments.
Tags: Crypto News, DeFi News
