Background
Just a few months ago Celsius was considered a major player in CeFi:
It had been around since 2018 with no major scandals. It had a completely doxxed team.
Provided what seemed an industry leading amount of transparency, with easy enough access to see all the figures.
They consistently held AMA's on a weekly basis. The CEO came across as a respectable operator in the crypto space.
They offered high APY interest on staked coins but they were noticeably less than some competitors and much lower than DeFi. So in the context of the crypto bull run they offered a somewhat reasonable rate that was relatively explainable.
Celsius did have regulatory issues, but that was a more universal issue effecting all players in the industry.
The summary above isn't a universally held view but a generalisation of Celsius Network.
Now that Celsius has failed, it's now revealed that they have a massive billion dollar hole in their books. They were knowingly pretending like they didn't, operating whilst insolvent. It won't be clear for sometime what funds will be returned to users.
Lesson
So the lesson here is:
Known leading figure, that is rubbing shoulders with all key crypto figures.....can still be a liar.
History of managing funds of customers well.... isn't proof they will continue to do so.
Provides insight into operations and figures to back up claims....... they're not independent figures, and the economic model needs to at least prove workable in one bull/bear crypto cycle.
In the context of the bull run, provided reasonable returns......crypto is such a wild place that things can be wildly distorted as to what is reasonable.
Project can be operating completely normal up to the very last hour.
Why it's a good case study
This is definitely one to bring up to new people getting into crypto, as a lot of other failures had a much more predictable demise due to a glaring flaw or three. Celsius meanwhile seemingly ticked alot of the boxes for an acceptable crypto project. It goes to show just how hard it is to DYOR and pick a winner/survivor and the tiring need to be constantly monitoring them.
This case study isn't to just help inform on how to approach CeFi projects going forward but really any crypto project. Most popular projects have a charismatic leader/s, an economic or technical model that's being sold as better than the rest and it clears the low bar set by other horrendous scams in being red flag free.
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