Swan Bitcoin CEO Cory Klippsten believes that the liquidity crisis involving the Celsius network could be just the beginning of a broader breakdown in the crypto lending space.
“Whether you’re a great CeFi lending platform lending these retail deposits out of the backend and giving them a yield, or a bad platform, they’re going to be dragged down,” Klippsten said in an exclusive interview with Cointelegraph.
Leading crypto lending platform Celsius halted withdrawals earlier this month, citing “extreme market conditions.” Since then, other crypto firms including Babel Finance and Three Arrow Capital have encountered liquidity issues.
Klippsten, a Bitcoin (BTC) extremist, has been an outspoken critic of centralized lending platforms such as Celsius.
“Their loan book is opaque, their activity is opaque. […] You are undercompensating for the risk,” he explained.
Klippsten is very skeptical that Celsius will be able to fully compensate users who are currently unable to access their funds on the platform.
“Unfortunately, it’s going to be a fight for scrap for years,” he predicted.
Klippsten described Celius as a particularly stark case of poor risk management, noting that similar business practices are common in the space and could soon be targeted by regulators.
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