Tezos co-founder calls Celsius bankruptcy predictable

Kathleen Breitman noted that the platform’s business model was unsustainable, and “economics has laws that transcend the word blockchain”

18.07.2022 - 06:45

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2 min

What’s new? Kathleen Breitman, the co-founder of decentralized blockchain Tezos, said that for those who have been in the crypto industry for a long time, the bankruptcy of the Celsius lending platform was not surprising as its business model was unsustainable. “Economics has laws that transcend the word blockchain, contrary to popular beliefs,” added Breitman. Herewith, referring to the bankruptcy of Three Arrows Capital (3AC), she noted that what happened to the hedge fund was “uniquely bad.”

Bloomberg’s interview

What else did Breitman say? She noted that the collapse of the Terra blockchain ecosystem triggered a further crisis for crypto companies. According to Breitman, “You really can’t make a sustainable protocol or business based on the theory that numbers will always go up.” It is because of the certainty of constant profit growth that most platforms have suffered, she summed up.

Tezos is a Layer 1 (L1) blockchain ecosystem with support for smart contracts and the Proof of Stake (PoS) consensus algorithm. Tokens and DeFi applications can be created on the platform. The network has built-in governance mechanisms for upgrades, so it does not require hard forks. Tezos has the native token Tez (XTZ). As of July 18, 06:50 UTC, it is trading at $1 665, having gained 1,7% in 24 hours, according to Binance.

Earlier, it became known that Celsius’ liabilities to customers and creditors exceeded its assets by $1,2 billion. The company was also accused of running a Ponzi scheme twice. The first lawsuit came from Celsius’ former partner, KeyFi, and the second from investors.

As for 3AC, the lawyers tasked in the bankruptcy case with assessing and realizing the fund’s assets to reimburse creditors were allowed to subpoena co-founders, Kyle Davies and Su Zhu. Earlier, the lawyers had been unable to locate them, and the fund’s office in Singapore was also empty. Consequently, experts expressed fears that Davies and Zhu would try to move the remaining assets offshore.

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