Another One Down?! Midas Investments Stops Operation

A cryptocurrency business from the decentralised finance (DeFi) ecosystem called Midas Investments has decided to cease operations after suffering significant losses as a result of the collapse of the FTX exchange. Iakov 'Trevor' Levin, the CEO and Founder of the yield farming platform, announced on Tuesday.

In May 2022, the business had $250 million in assets under management (AuM), according to Levin's statement posted on Midas' official blog. The collapse of Terra's UST stablecoin, caused by the collapse of the cryptocurrency market, cost $50 million.

Then, the FTX exchange's bankruptcy in November and the Celsius lender's subsequent default sparked panic among yield platform users, resulting in the withdrawal of more than 60% of AuM. Levin and the other Midas Investments representatives decided to shut down the current operations due to the asset shortfall and the challenging macroeconomic environment.

Levin elaborated that in the past eight months, the company attempted to find and seize chances to balance its assets and liabilities. Several initiatives were taken, including launching CeDeFi strategies and seeking investment and more opportunities. Nevertheless, large withdrawals within a short time made it hard to cover user payouts daily.

Deposits and withdrawals are no longer available on Midas' platform at the moment. Additionally, withdrawals are temporarily prohibited because the platform will convert 55% of users' stablecoin, ETH, and BTC balances into Midas tokens.

Midas‘ approach of converting platform users’ cryptocurrencies into its own tokens has an uncanny resemblance of TriumphFX and its TFX Coin – which had lost almost 80% of its value in a matter of few weeks.

Read more here: https://www.wikifx.com/en/newsdetail/202212273884668866.html

Levin also acknowledged that some team members were aware of the asset deficit, but the rest were not. Along with the failure of FTX and Terra, the DeFi market's long-term risk, the platform's shaky business model, and the low liquidity of its native token all contributed to the issues.

Several well-known cryptocurrency companies failed after Sam Bankman-FTX Fried's exchange and Do Kwon's Terra ecosystem filed for bankruptcy. BlockFi, a cryptocurrency lender, was the first victim of FTX. A cryptocurrency hedge fund called Three Arrows Capital filed for bankruptcy earlier in 2022 due to the Terra collapse. Two cryptocurrency lenders, Voyager Capital and Celsius Network, went into default after that.

The string of bankruptcies made the cryptocurrency market even more pessimistic. It led to a sizable outflow of cash from centralised exchanges to self-custody wallets, worsening the state of the mining sector. The publicly traded miner Argo Blockchain was in danger of going out of business when Mike Novogratz's Galaxy Digital company invested in it and provided a loan to save it.

Despite being forced to shut down his company, the founder of Midas plans to launch a new initiative that will advance the CeDeFi vision, which connects the worlds of centralised and decentralised finance.

“Despite the harm caused by this incident, Midas can only move forward by creating something appropriate for this new market in this manner. We want to concentrate on a brand-new endeavour that supports CeDeFi's mission. In order to provide a fresh and improved investing experience, this project will be fully transparent, on-chain, and constructed, ”Levin tacked on.

The new business model is expected to guarantee a share of ETH revenues transferred to the Midas token. The team plans to reach a capitalisation of $200 million over the next two years.

According to the roadmap, testing of the new product will begin in March, and Midas wants to replace the current tokens with the new ones in April.

Prior to the start of the new year, do conduct a due diligence on your selected broker / platform in order to further reduce the underlying investment risk. Download the free WikiFX mobile app to help you conduct this research efficiently and effectively!