Much of the carnage over the last few weeks stems from the suspension of withdrawals from athat partly modelled itself on a traditional investment bank, but without a depositor guarantee.
The fees they received for lending that crypto reached as high as 18 per cent, but as the global, macroinvestment picture darkened earlier in this year, the demand for crypto loans dried up. “Essentially, this was a crypto bank run,” Dr Low said. “And there were no requirements for Celsius to have a backstop of capital in reserve, so they were caught out.”
“The difference between that and the crypto world is that the crypto world has thousands of exchanges all over the world,” Dr Low said. “It’s a way to monetise your holdings,” said Dr Low, whose PhD looked specifically at how much capital is required to back a securities-lending business.