Another cryptocurrency investment firm shuts down and confiscates 55% of client funds, firm intends to use to balance assets and liabilities on its balance sheet


Midas Investments, a platform that allowed users to earn passive income from their cryptocurrency holdings via DeFi returns, announced that it closed its operations due to unforeseen circumstances beyond its control. The company suggests that the collapse of FTX and Celsius, as well as other devastating events so far in 2022, would have made it impossible to continue operations under normal conditions. The company also added that it would charge 55% on most customer accounts to “balance assets and liabilities”.

Midas Investments is a CeDeFi platform, i.e. a hybrid platform that combines centralized financing (CeFi) and decentralized financing (DeFi). CeDeFi offers DeFi products such as yield farming, lending, borrowing, liquidity staking and token swapping, which are available on DeFi protocols while complying with legislation. According to industry players, CeDeFi addresses the lack of regulation in the crypto space. It would do so by complying with rules that help law enforcement identify potential criminals in a more direct way.

CeDeFi is also characterized by centralized entities that use governance structures similar to those in the traditional financial sector, but embrace the efficiency of decentralized financing, thereby reducing costs. Last Tuesday, Midas Investments notified its clients that it would close on December 27. I am writing to you today with a heavy heart to announce that the Midas Investments platform is closing,” wrote Iakov Levin, CEO of Midas Investments, who also goes by the name “Trevor,” in a Dec. 27 blog post. He claimed that the platform fell victim to the 2022 market winter.

Levin said that the turmoil in the cryptocurrency market in the spring of 2022 caused Midas’ DeFi wallet to lose $50 million of its $250 million market cap, or 20%. Then, following the bankruptcy of Celsius Networks on July 13 and FTX on November 11, “the platform experienced the withdrawal of more than 60% of assets under management (AUM), creating a significant deficit in ‘assets’ of $63.3 million , based on assets of $51.7 million against liabilities of $115 million in BTC, ETH and stablecoins.According to him, the situation no longer allows us to move forward.

Based on this situation and the current CeFi market conditions, we have made the difficult decision to shut down the platform,” Levin wrote. He reckons his team has spent the last eight months finding ways to balance assets and liabilities, including “launching CeDeFi strategies, fundraising and exploring opportunities with DeFi protocols”. Despite these efforts, large withdrawals due to Celsius and FTX insolvency, combined with reduced return opportunities in the market, made it impossible to cover daily payments to users due to the asset shortage.

Levin said only Midas C-suite executives were aware of the asset shortfall, and the marketing, support, IT and platform teams were unaware. The asset shortfall was caused by the long-term risk of DeFi investments, the instability of our business model after the loss of assets, and the illiquidity of the Midas token,” he said. In the blog post, Levin also outlined his company’s plan to balance assets and liabilities. Initially, from December 27, deposits and swaps were disabled on the Midas platform.

Midas explained that it will then withdraw 55% of the balance for users with more than $5,000 in their accounts, as well as rewards earned by all users. Withdrawals will be disabled for 2-3 hours while we ensure balance calculations and adjustments are made correctly. Once this is done, you will be able to withdraw the remaining assets from the platform where the earned rewards will be deducted from your balance,” he wrote. Levin also said that users would receive MIDAS tokens equivalent to the deductions as compensation.

These tokens will then be exchanged for tokens from Midas’s next project, which he then described. In January, Midas will focus on market research and prototyping DeFi and CeDeFi business models, as well as creating prototype voices and strategies and developing new investment processes. In February, the team will continue market research and begin investing, work on developing a minimum viable product, and engage in DeFi protocols,” Levin wrote. He said that private testing of the product will be done in March.

And in April, Midas plans to exchange the current tokens for the new tokens. Levin held an AMA (ask me anything) session with Midas customers on YouTube on Thursday, and it started with a mea culpa. I know it was really hard for you and I’m so sorry it came to this. I take responsibility and try to explain what happened. “I understand that it won’t give you back the money you lost with Midas, I understand that you want to burn everything Midas has to do with Midas now, and of course I accept that,” he said.

Levin said he was responsible for vision and decision-making and made “big mistakes” as CEO of Midas. I was incompetent and with my team we were incompetent in the management of funds. “We didn’t understand the impact of having the $300 million that we got in March,” he said. Meanwhile, after recently revealing how it plans to reimburse users, DeFi platform Defrost Finance has finally broken its silence on accusations of conducting a ‘carpet pull’ following the recent exploit that cost $12 million.

The Defrost team said a compromised key does not equal a “rug pull.” In other DeFi news, Mango Markets hacker Avraham Eisenberg was recently arrested and charged. In a complaint made public on December 27, the FBI charged Eisenberg with fraud and securities manipulation. In addition, Sam Bankman-Fried, the founder of FTX, agreed to post $250 million in bail for his release. He is attached to his parents’ home in California pending the start of his fraud trial. He faces 8 counts.

Source: Midas Investments

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