June 14, 2022
1 min read

‘Blockchain-based DeFi platforms need scrutiny’

Celsius operates in much the same way as a bank, but rather than in fiat money it does so in cryptocurrency. It collects deposits and then loans them out…reports Asian Lite News

As leading cryptocurrencies nosedive, investors of DeFi (decentralised finance) platforms also need to exercise “caution and scrutiny” amid growing concerns about the liquidity of this certain type of cryptocurrency service, experts warned on Monday.

The warning came as Celsius Network, a DeFi platform and one of the largest crypto lenders, announced that it was “pausing all withdrawals, swap, and transfers between accounts” for its 1.7 million clients.

“The wider crypto ecosystem has been rocked again – not by ‘real’ cryptocurrencies like Bitcoin, but by DeFi,” said Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisories.

“The unprecedented move by Celsius is effectively blocking clients from accessing their assets which will do little to quell fears from critics that some DeFi platforms could be Ponzi schemes,” he noted.

Celsius Network said in an email to customers late on Sunday that due to extreme market conditions, “we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Celsius operates in much the same way as a bank, but rather than in fiat money it does so in cryptocurrency. It collects deposits and then loans them out.

“There are legitimate and serious concerns about networks’ high yields, links to failed dollar-pegged stablecoin Terra, and reserves,” said Green, urging people to exercise caution and scrutiny on crypto lending firms which offer clients lucrative double-digit yields on assets like Bitcoin and Ethereum.

The DeFi lending giant Celsius halting withdrawals has weighed on the broader crypto sector with Bitcoin, the world’s largest digital token plunging to the lowest in 18 months in Asia trading on Monday.

Decentralised finance or DeFi offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a Blockchain.

ALSO READ-Rupee breaches ₹78 mark against dollar

Previous Story

Rajnath: Break civil-military silos to deal with hybrid threats

Next Story

In the era of markets expecting the unexpected 

Latest from Business

PM Modi: India poised to lead next tech wave

PM Modi underscored that the country is poised to lead the next wave of digital transformation in 5G…reports Asian Lite News Prime Minister Narendra Modi on Wednesday hailed India’s progress in expanding

India Hits 100GW Solar

The expansion is not only in scale but also in quality, with significant capacity dedicated to high-efficiency modules. Many manufacturers have adopted vertically integrated operations, enhancing quality, reducing costs, and improving resilience

Jewellery Exports Shine Bright

The GJEPC noted that product diversification has played a major role in sustaining momentum. Lightweight and contemporary designs are gaining traction among younger global consumers, helping Indian jewellers appeal to a wider

China Curbs Hit India’s Electronics Boom

The ICEA noted this results in delays, inefficiencies, and higher costs — alternatives from Japan or Korea cost up to four times more than Chinese machinery. India’s transformation into a global electronics
Go toTop

Don't Miss

MI6 warns against use of Chinese digital currency

He also criticised the Chinese government over the illegal use

Argentina seeks India’s cooperation on currency swap issues

The second Finance and Central Bank Deputies Meeting under India’s