Kathleen Breitman, co-founder of Tezos decentralized layer 1 blockchain, stated that the bankruptcy filing by Celsius Network, a troubled crypto lender, is not surprising, as such business models can be sustained over the long term.
Breitman: Celsius’ Bankruptcy Unsurprising
Remember that Celsius filed for Chapter 11 bankruptcy protection voluntary after users were stopped from withdrawing and redeeming funds due to extreme market conditions.
Breitman stated in a Bloomberg interview that “for those of us who are in this industry for quite a while, it’s completely not surprising that something like Celsius would go bust because economics has laws which transcend the term blockchain.”
The co-founder of Tezos, she said that some recent events in crypto were predictable while others were more unpredictable. She cited Three Arrows Capital’s bankruptcy and said that the fate of the crypto hedge fund was “uniquely terrible.”
Terra’s Domino Effect
It was the largest venture capital (VC), firm in the crypto space. It backed many of the top blockchain startups and projects such as Ethereum, BlockFi and Polkadot.
Three Arrows Capital (3AC), began facing financial difficulties after the May-caused collapse of Terra’s blockchain. After the crash, crypto assets prices plummeted to new levels as a result. The hedge fund was unable to meet margin demands from crypto lenders and it was forced to liquidate from BlockFi.
3AC still owes $640 million to Voyager Digital, a crypto broker. Voyager plans to recover the VC but the brokerage firm has filed voluntary Chapter 11 bankruptcy. After suspending withdrawals, Voyager had suspended all withdrawals.
The numbers will not always go up
Some crypto companies are facing financial crisis, but Breitman says these are shakeouts of “things that just couldn’t have worked.”
She concluded that “you can’t build a sustainable business or protocol if you assume that the numbers will always rise.”
Marla Brooks – Financial Analysis
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