Midas Investments Closes Down Amid Contagion from FTX and Celsius Crashes

In the Brief:

  • Midas Investments has suspended services due to financial losses caused by FTX and Celsius crashes.
  • CEO Iakov Levin plans to focus on a new, transparent project in the future.
  • Midas Investments aims to roll out DeFi strategies for both CeFi and DeFi users.

3 - 5 minute read

Cryptocurrency platform Midas Investments has suspended services on its platform following the bankruptcy of Celsius and the recent woes of FTX. In a blog post, Midas Investments’ Founder and CEO Iakov Levin announced that the company had shut down services on its platform on December 27th, disabling customer withdrawals for a few hours to conduct necessary calculations before allowing users to withdraw their remaining funds with adjusted deductions.

According to Levin, the company initially aimed to deduct 48% from client balances but later changed the figure to 55%. Balances in digital currencies including BNB, AVAX, and FTM will not be impacted, and the company will also distribute MIDAS tokens as compensation to affected customers based on their deducted amount.

Levin revealed that the company lost around $50 million (20% of $250 million AUM) this spring, and users withdrew a large chunk of their holdings after the collapse of Celsius and FTX. Midas Investments attempted to find fundraising and other options to deal with the crisis, but these efforts ultimately proved unsuccessful.

“Despite these efforts, the extensive withdrawals due to the insolvency of Celsius and FTX, coupled with reduced yield opportunities on the market, made it impossible for us to cover daily payouts to users due to the assets deficit,” Levin said.

The impact of the FTX crash has been far-reaching, with numerous companies experiencing negative effects on their operations. Japanese crypto platform Liquid Global and cryptocurrency lender Genesis Global Capital have both suspended withdrawals, while BlockFi has gone further and filed for bankruptcy protection. Even big players in the financial world such as BlackRock, Temasek, Tiger Global Management, and Galois Capital have lost millions due to investing in FTX.

Looking ahead, Levin believes that both retail and institutional clients will significantly increase their interest in decentralized finance (DeFi) in the next five years. As such, Midas Investments plans to roll out “scalable, on-chain, verifiable, tokenized CeDeFi strategies” for both CeFi and DeFi users. The company also aims to introduce a new project “built on principles of full transparency” that will have its own native token, eventually phasing out the MIDAS token in favor of the new asset.

Levin apologized to all customers affected by the platform’s closure and expressed hope that the planned amendments will be the best solution to the current problems. “This is not the end, but rather the beginning of something new,” he said. “I understand the difficult decision to close Midas and apologize to anyone who lost money. I will do my best to make sure you can recoup your losses in the new project.”

The recent charges brought by the Securities and Exchange Commission (SEC) against Ellision and Wang, founders of cryptocurrency exchange EtherDelta, have sparked speculation of a more aggressive regulatory approach towards the crypto industry. The SEC views all crypto assets as securities, regardless of how they are offered or sold, and there are now fears that the agency could potentially ban crypto exchanges.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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