The FTX Contagion Continues: Midas Investments Goes Bankrupt

 

After the crashes of Celsius and FTX, Midas Investments halted platform operations.

 

Due to massive financial losses brought on by the bankruptcy of Celsius and the FTX scandal, cryptocurrency exchange Midas Investments suspended deposits and swaps.

A new initiative that is “completely transparent” and provides a “enhanced investment experience,” as stated by CEO Iakov Levin, will be the primary emphasis of the company in the coming year.

 

One More Victim

 

The founder and CEO of Midas Investments announced the platform’s closure in a blog post published recently (December 27). Customers were unable to withdraw funds for a short time while the necessary computations were made, but they were thereafter able to take what was left after fees were recalculated.

 

Levin disclosed that the organization’s original plan called for a 48% deduction from customer accounts but was later raised to 55%:

 

For user accounts, “we will modify balances by balancing remaining liabilities in BTC, ETH, and stablecoins with remaining assets, removing 55% and rewards earned.”

 

No changes will be made to holdings of other cryptocurrencies such as BNB, AVAX, or FTM. As a form of compensation for affected clients, the company will also award MIDAS tokens equal to the amount that was removed from their account.

 

Levin predicts that in the next five years, Decentralized Finance (DeFi) will garner much more attention from retail and institutional clients. In light of this, Midas Investments plans to introduce “scalable, on-chain, verifiable, tokenized CeDeFi methods” for users of both CeFi and DeFi.

 

In addition, the company is working on a new initiative “based on principles of full transparency” that will feature its own native cryptocurrency. The company will eventually discontinue trading MIDAS tokens and replace them with the new asset.

 

The CEO expressed regret to any and all affected users of the platform. Hopes were aroused that the proposed changes would prove to be the optimal response to the pressing issues at hand.

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What Caused the Problem?

 

According to Levin, the firm lost about $50 million this spring (20% of $250 million AUM) as investors fled following the demise of crypto titans Celsius and FTX. Midas Investments tried to raise money and take other measures to weather the crisis, but nothing they did was able to reverse the market decline.

Many businesses were adversely affected by the FTX debacle because it had a domino effect. Liquid Global, a Japanese cryptocurrency exchange, and Genesis Global Capital, a cryptocurrency lender, have both temporarily halted withdrawals, while BlockFi has gone even farther by filing for bankruptcy.

 

BlackRock, Temasek, Tiger Global Management, Galois Capital, and other major investment firms lost millions betting on FTX and eventually pulled their money out.