Users are way under-compensated for the risk

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Swan Bitcoin CEO Cory Klippsten believes that the liquidity crisis involving Celsius Network may be just the beginning of a broader collapse in the crypto lending space. 

“It doesn’t matter if you’re an amazing CeFi lending platform, taking these retail deposits and lending them out the back end and giving them yield, or a terrible one, they’re all going to get kind of dragged down,” Klippsten said in an exclusive interview with Cointelegraph.

Celsius, a leading crypto lending platform, halted withdrawals earlier this month, citing “extreme market conditions.” Since then, other crypto firms, including Babel Finance and Three Arrow Capital, have experienced liquidity issues.

Klippsten, a hardcore Bitcoin (BTC) maximalist, has been a vocal critic of centralized lending platforms such as Celsius. 

“Their loan books are opaque, their activities are opaque. […] You’re being way under-compensated for the risk,” he explained. 

Klippsten is quite skeptical that Celsius will be able to fully compensate users who are currently unable to access their funds on the platform.

“It’s going to be a fight over the scraps, unfortunately, for a number of years,” he predicted.

Klippsten describes Celius as a particularly stark case of bad risk management, pointing out that similar business practices are common in the space and they will be soon targeted by regulators. 

Don’t miss the full interview on our YouTube channel and don’t forget to subscribe!

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