News of crypto exchanges falling like flies is almost becoming commonplace in the news circles. In the most sullen of ways, yet another crypto firm is hanging up its towel. And this time, it might be for good. Crypto exchange Midas Touch announced that they would be shuttering operations in the coming weeks.
CEO Iakov “Trevor” Levin said the Midas DeFi Portfolio lost 20% of its $250 million ($50 million) in assets under management. Trevor added that users withdrew around 60% of its AUM following the collapse of crypto firms like FTX and Celsius.
As of Dec. 27, Midas’ total liabilities were $115 million in Bitcoin (BTC), Ethereum (ETH), and stablecoin. However, the platform holds roughly $51.7 million of these assets, creating a deficit of $63.3 million. He added that only C-level executives of the firm were aware of the asset deficit.
Security Breaches and Overpaid Interest Hurt Midas
Meanwhile, Trevor highlighted that Midas lost $58.5 million to several DeFi-related security breaches and overpaid interest in its native MIDAS token. Later CEO Trevor added that Midas would rebalance its users’ accounts by deducting 55% from them and their rewards earned. The move would allow users to withdraw 45% of their assets.
According to him, users whose balances are less than $5000 would have only their earnings deducted. He added that Midas would pay for the differences in its native tokens that would be exchanged for the token of its new project.
The Midas CEO wrote that the platform would look to pivot its businesses into centralized, decentralized finance (CeDeFi). He said:
“This project will be fully transparent, on-chain, and built with the goal of offering a new and improved investment experience.”
Just How Much Did Midas Lose?
The blog also detailed the heavy losses suffered by the platform in 2022, as Levin claimed that the Midas platform suffered a cumulative loss of $50 million.
According to the founder, the platform needs to be shut down since the respective crashes of the Celsius, and FTX ecosystems wiped out over 60% of all assets under the management of the Midas portfolio and created a significant asset deficit.
Furthermore, Levin also outlined the way forward for Midas, claiming that the company will be focusing on its CeDeFi or centralized, decentralized finance initiatives in order to create fully transparent, on-chain investment options.
When Will The Shutdown Take Place?
The company has already started its process of shutting down the DeFi platform. On Tuesday, all deposits, swaps, and withdrawals were disabled. The team is working on calculating and adjusting account balances by deducting 55% from user balances held in BTC, ETH, and stablecoins.
The remaining amount will be compensated with MIDAS tokens that users will be able to exchange for the new tokens of the upcoming project.
“The goal of the new project is to create a win-win situation by connecting competing protocols with liquidity and offering a simplified yield to a range of DeFi and CeFi audiences.”
Can Midas Make a Comeback?
Could we see a return from Midas Touch? Will this set the precedent for other projects returning from the grave? There is a lot to say about a company that pivots and makes a comeback with new products and a better-managed balance sheet.
There could be a crypto spring in the making, and we couldn’t be happier about it. Let’s hope that this spring starts blooming sooner than later. If not, we’ll all be stuck, frozen, and with significantly lighter portfolios at the end of this crypto winter.