Cory Klippsten, CEO of Swan Bitcoin, believes that the liquidity crisis involving the Celsius network may just be the beginning of a broader collapse in the crypto lending space.
“It doesn’t matter if you’re a great CeFi lending platform that takes those retail deposits and lends them to the back end and gives them a return, or a terrible return, they all just kind of go down,” Klippsten said in an exclusive interview with Cointelegraph.
Celsius, the leading cryptocurrency lending platform, suspended withdrawals earlier this month, citing “harsh market conditions.” Since then, other crypto companies, including Babel Finance and Three Arrow Capital, have faced liquidity issues.
Klippsten, a hardcore Bitcoin (BTC) fanatic, has been an outspoken critic of centralized lending platforms like Celsius.
He explained that “their loan books are opaque and their activities are opaque.
Klippsten is completely skeptical that Celsius will be able to compensate users who are currently unable to access their funds on the entire platform.
“It will be a battle over scraps, unfortunately, for a number of years,” he predicted.
Klippsten Celius describes it as a particularly glaring case of risk mismanagement, noting that similar business practices are common in the space and will soon be targeted by regulators.
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