Cryptocurrency investment platform Midas.Investments is the latest casualty of the ongoing contagion with centralized yield providers in the industry. Midas had $250 million in assets under management (AUM) as recently as the Spring of 2022 but will wind down its business in the wake of a “large asset deficit.”
Midas offers a platform for users to earn interest on various cryptocurrencies. The platform developed several strategies that allowed it to earn interest for users through various CeFi and DeFi strategies. For instance, the DeFi YAP strategy provided a proxy for getting exposure to top DeFi tokens.
In a blog post and video released Tuesday, Midas’ CEO Trevor disclosed that the company’s DeFi portfolio suffered a cumulative loss of $50 million. The amount was reportedly worth 20% of the company’s assets at the time.
The significant loss was further compounded by the recent collapse of centralized lenders like Celsius and FTX. Amid the massive outflow from centralized platforms, Midas users withdrew 60% of assets, thus creating a large deficit. The company also lost a further $58.5 million to several DeFi-related security breaches and overpaying interest in its native MIDAS token.
Per today’s report, the company owes $115 million in liabilities but only holds $51.7 million in Bitcoin, ETH, and stablecoins. The deficit is an estimated $63.3 million, which will now be used to reimburse customers.
Midas Users to Receive 45% of Deposited Assets
Instead of a grueling bankruptcy process that might take several years for users to recover assets, Midas is seemingly taking matters into its own hands. The platform will rebalance users’ portfolios by deducting 55% of the available balance and rewards earned.
Following the deduction, users may be able to withdraw 45% of their portfolio value. Midas notes that the rebalancing will not affect users with less than $5,000 in deposited assets. Such users will only lose earned rewards, while all users can immediately withdraw the remaining amount in their wallets.
Meanwhile, Midas will pivot to developing a new product that imbibes DeFi and CeDeFi business models. The new business would integrate with the MIDAS token, which has suffered a 99% decline in the wake of the Midas.Investments shutdown.
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