Is this crypto investment firm collateral damage of bear market 2022? Decoding…

• Midas Investments announced that it will cease operations due to significant losses incurred in 2022
• The firm plans to shift to a centralized decentralized finance (CeDeFi) model 

Custodial crypto investment platform Midas Investments announced that it will be winding down its operations. This move came after a year of catastrophic market events that led to significant losses for the firm. 

$50 million lost in 2022

According to an open letter by lakov “Trevor” Levin, founder and CEO Midas Investments, the firm’s DeFi portfolio suffered a cumulative loss of $50 million in spring 2022 alone. This represented 20% of Midas’ $250 million of assets under management (AUM). 

As of 28 December, the investment firm stood in the face of $115 million worth of liabilities, against $51.7 million in assets. This presented a $63.3 million deficit in its balance sheet. Additionally, this also included $14 million lost to Ichi Protocol and another $15 million to DeFi Alpha portfolio position’s decreasing value. 

Other high-profile market events including the downfall of crypto lender Celsius and Bahamas-based crypto exchange FTX also contributed to Midas’ predicament. These events led to an outflow of assets representing more than 60% of its AUM. 

Centralized Decentralized Finance (CeDeFi) vision

Midas CEO Trevor Levin clarified that the firm will rebalance the accounts of its users by deducting 55% from their rewards account. This would mean that users will be able to withdraw 45% of their funds.

The firm suspended withdrawals for a few hours to facilitate this rebalancing. Withdrawals have since been enabled. Additionally, the CEO laid out a centralized decentralized finance (CeDeFi) vision for the company going forward.

“We aim to focus on a new project that aligns with our vision for CeDeFi. This project will be fully transparent, on-chain, and built with the goal of offering a new and improved investment experience,” he stated. 

CeDeFi is a hybrid product that brings together the functionalities of CeFi and DeFi. This model addresses the concerns surrounding regulations and compliance when it comes to crypto products. Midas Investments plans to offer scalable, on-chain, verifiable, tokenized CeDeFi strategies for both CeFi and DeFi users.