(Kitco News) –
Midas Investments, the hybrid centralized/decentralized (CeDeFi) cryptocurrency platform, announced Tuesday that they will shut down operations as of Dec. 27 and will deduct 55% from most customer accounts to “balance assets and liabilities.” This morning, Midas’ CEO shut down his own AMA with customers after less than half an hour.
“I am writing to you today with a heavy heart to announce that the Midas platform is closing down,” wrote Iakov Levin, CEO of Midas Investments, who also goes by ‘Trevor,’ in a Dec. 27 blog post.
Levin said that in the spring of 2022, the advent of the crypto winter saw Midas’ DeFi portfolio lose $50 million of its $250 million market value, or 20%. Then, following the bankruptcy of Celsius on Jul. 13 and FTX on Nov. 11, “the platform experienced over 60% of AUM being withdrawn, creating a large asset deficit” of $63.3 million, based on assets of $51.7 million against liabilities of $115 million in BTC, ETH and stablecoins.
“Based on this situation and current CeFi market conditions, we have reached the difficult decision to close the platform,” Levin wrote.
Levin wrote that his team spent the past eight months trying to find ways to balance their assets and liabilities, including “launching CeDeFi strategies, seeking fundraising, and exploring opportunities with DeFi protocols. Despite these efforts, the extensive withdrawals due to the insolvency of Celcius and FTX, coupled with reduced yield opportunities on the market, made it impossible for us to cover daily payouts to users due to the assets deficit.”
Levin said that only Midas’ C-level executives knew about the asset deficit, and the community, marketing, support, IT, and platform teams were not aware. “The asset deficit was caused by the long-term risk of DeFi investment, the instability of our business model after the loss of assets, and the illiquidity of the Midas token,” he said.
Midas also outlined its plan to balance assets and liabilities, saying that as of Dec. 27 at 11:00 AM UTC, deposits and swaps have been disabled on the platform. They then will deduct 55% of the balances of users with over $5000 in their accounts, along with the earned rewards of all users, and leave the balance in users’ accounts. “Withdrawals will be disabled for 2-3 hours while we ensure that calculations and balance adjustments have been made correctly,” Levin wrote. “Once this is done, you will be able to withdraw the remaining assets from the platform, with any rewards earned being deducted from your balance.”
Levin also said that users would be issued MIDAS tokens equivalent to the deductions as compensation, which will later be swapped for the tokens of Midas’ next project, which he then outlined.
“In January, Midas will focus on market research and prototyping for DeFi and CeDeFi business models, as well as creating prototype vaults and strategies and developing new investment processes,” Levin wrote. “In February, the team will continue with market research and begin investment traction, working on the development of a minimum viable product and engaging with DeFi protocols.”
Levin said that private tests of the product will be conducted in March, and in April, Midas plans to swap the current tokens for the new ones.
“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,” he said. “The first product will be a transparent, on-chain treasury that allows users to mint tokens backed by stablecoins, BTC, or ETH by depositing collateral in ETH.”
“I know it was really hard for you guys, and I’m incredibly sorry that it came to this,” he said. “I am taking the responsibility and trying to explain what happened. I understand that it does not give you money back that you lost with Midas, I understand that you want to burn everything related to Midas now, and I obviously accept it.”
Levin said he was responsible for the vision and decision-making and he made “huge mistakes” as the CEO of Midas. “I was incompetent, and my team, we were incompetent in managing funds. We did not understand the impact of having […] $300 million that we got in March.”
Levin then began answering the submitted questions, which included harsh criticism and accusations from Midas customers about his decisions and the losses they caused. After 27 minutes, he claimed he was going to fix his screen sharing and disconnected, but never returned.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
