A very popular Defi (Decentralized Finance) exchange Celsius is collapsing like lego blocks. The company does a lot of crypto loans and with the collapse of the cryptocurrency market, looks like the company is going down under. The company blocked withdrawals to fiat currency recently citing liquidity pressures. This essentially means nobody is allowed to do withdrawals, normally this means the company is have cashflow issues. And cashflow issues normally are quite hard to turnaround.
This exchange was previously heavily promoted by many regional personal finance influencers (Malaysia, Singapore) with their referral codes. What was promised was interest payments from 10%-30% returns. People were influence to part their money, called "staking" in crypto slang to earn interest rates.
The crypoto lending space using Defi is facing a lot of issues now and Celsius is not the only one doing crypto lending.
Ironically, Alex Mashinksy, the Celsius founder famously wore "Banks are not your friends" shirt during his talks and openly criticizes banks have to eat his words now...since Celsius, the very company he founded cannot be trusted.
Personally I don't have exposure to Defi but was actively studying its business model and operations. I didn't go into Defi because Defi relies on Smart contracts which is essentially a program that runs on the blockchain which will automate execution of orders (buy sell lending). The Smart contracts are written by humans and there is a lack of regulatory oversight and audit on Smart Contracts program making these Smart Contracts sometimes easy target for hackers and some has backdoors for founders to rugpull investors.
Updates 20220701
Unsurprisingly, Celsius has finally filled for bankruptcy. It is highly unlikely depositors will get their money back , this is the nail in the coffin.
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