Midas Investments, a platform for custodial crypto currency investments, recently announced that it would be shutting its business. This decision was made after a year of disastrous market occurrences that resulted in enormous losses for the company.
According to an open letter (1) sent by the founder and chief executive officer of Midas Investments, Lakov "Trevor" Levin, the company's DeFi portfolio saw a total deficit of $50 million in spring 2022 alone. This accounted for 20% of the $250 million in assets that Midas was managing at the time (AUM).
As of the 28th of December, the investment company had liabilities totaling $115 million, but its assets amounted to only $51.7 million. This resulted in a shortfall of $63.3 million for the company's balance sheet. In addition, this also included a loss of $14 million due to Ichi Protocol and another $15 million due to a decrease in the value of a portfolio investment held by DeFi Alpha.
"I'm Trevor, the CEO of Midas Investments, and I am writing to you today with a heavy heart to announce that the Midas platform is closing down. In the spring of 2022, Midas DeFi portfolio suffered a cumulative loss of 50 million dollars (20% of $250 million AUM).
After Celsius and FTX events, the platform experienced over 60% of AUM being withdrawn, creating a large asset deficit. Based on this situation and current CeFi market conditions, we have reached the difficult decision to close the platform."
Other high-profile market occurrences, including the failure of crypto lender Celsius and the crypto exchange FTX, which was domiciled in the Bahamas, also contributed to Midas's dilemma. These occurrences caused an outflow of assets that accounted for more than sixty percent of its AUM.
Way Forward for Midas is CeDeFi
Trevor Levin, the CEO of Midas, has stated unequivocally that the company will equalize its customers' accounts by withdrawing 55% from the users' reward accounts. The implication of this is that consumers will be able to retrieve 45% of their cash at any given time.
The company temporarily halted withdrawals for a few hours to facilitate this balance. Since then, withdrawals have been made possible. In addition, the chief executive officer presented a vision for the company's future that included centralized and decentralized finance (CeDeFi).
"Our goal is to shift our attention to a new venture that is congruent with our objectives for CeDeFi. According to what he said, "This project will be completely transparent and on-chain, and it will be built with the goal of offering a new and improved investment experience."
CeDeFi (2) is a hybrid solution that combines the features and capabilities of both CeFi and DeFi into a single offering. When it comes to crypto products, this model tackles the concerns that are associated with legislation and compliance.
Users of both CeFi and DeFi will be able to take advantage of Midas Investments' intentions to provide scalable, on-chain, verifiable, and tokenized CeDeFi solutions.