Contagion suggests no one is responsible, but did these lenders and exchanges act responsibly?
Today I say something I feel people aren’t saying, but many of us are thinking.
“The failing crypto lenders were not responsible, and didn’t fulfill their due diligence responsibility and moral responsibility.”
- I think that the people running these failed or failing cryptocurrency lenders and financiers have a fiduciary responsibility to their depositors to invest their users funds wisely.
- In addition, I think they have a certain moral responsibility to safeguard their users funds from loss, as far as possible.
But this is our community, shouldn’t we defend them?
- While I understand the need some people feel in the Crypyocurrency economy to defend these people because they are builders in this space. I feel we have a responsibility as members of this community to criticize irresponsible investment practices.
But this is the wild, Wild West of finance
- I know this is the wild, Wild West of finance, and it’s popular to say invest only what you can afford to lose…
- But I think that is commonly accepted when an investor APEs Into a risky investment, like a brand new DeFi project, by an anonymous developer because it has a high rate of return like 1000% APR.
- Those are gambles, and clearly the majority of users know this.
- But those people who didn’t invest in the Terra Luna platform, but instead invested in older, more established platforms, with much lower rates of return, because they were safe are waking up to find those responsible, respectable platforms were not responsible!
- Those careful investors are waking up to find that those lenders and financiers were gambling with their money, and earning big profits risking their money.
There May have been some dishonesty or a lack of transparency
- It is my belief that these safe, respectable lenders these investors chose instead of risky high return investments were actually investing the investors funds in high yield but risky investments.
- We now know that Blockifi, Three Arrows, and others had either invested their investors funds in Terra Luna, or invested their investors funds with other companies who were investing in Terra Luna.
- ‘We know this because they are telling us they are unable to repay their investors because the investors money was lost in the Terra Luna failure or that the people they loaned their investors funds to, can’t pay it back, because they lost the money in Terra Luna.
My cynicism makes me think the following..
- I suspect that they were making big profits from the big difference between what they were making on Terra Luna and what they were paying their investors.
- Lastly, even those companies who didn’t invest their investors funds in Terra Luna, but loaned those funds to companies which did invest in Terra Luna are still responsible.
- I believe they had an obligation to know what the loaned funds were going to be used for, to insure the safety of those funds which were I trusted with them.
- I believe these were basic responsibilities that an investor expects from multi-billion dollar investment companies.
- What do you think?
@shortsegments
About @shortsegments
Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over four years.
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I think it's irresponsible behavior. We all know that the high-interest rates were covered by loaning out people's crypto and they were investing in the same corporations.
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Yes, we have all learned valuable lessons here, including that even big projects can be run by small individuals, along with the importance of Selfcustody and Proof of Reserves.
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Like you said investing is like gambling and only invest on what you can lose.
The crypto lenders that claims to give 1000% APR returns can only do that when they are using their users funds to do other investment and of course that's what they are doing just like the case of Celsius and when it turns bad they come up with "terms and conditions" right claims.
So DYOR is also important for any investor too before investing on any platform to know the kind of gamble they are making.
Yes, two valuable lessons here:
Selfcustody and Proof of Reserves.
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