Cryptocurrency investigators are still scratching their heads trying to figure out what led to the demise of UST and LUNA last May.
Analytics from Nansen recently pointed out that lending platform Celsius could be one of the contributors that led to the collapse of TerraUSD. Celsius, on the other hand, does not agree with these speculations.
This scrapes open the issue of transparency in the DeFi industry. In this industry, it can be very difficult to understand where money is going or how easy it is to trigger a currency meltdown. This is why regulators are so concerned about the impact of DeFi on investors and the financial system in general.
The Anchor Protocol was a very popular service for TerraUSD holders, but a big lump of investors withdrew their money from Anchor in May. It is still unclear why this happened, but some theories have popped up.
One of these theories argues that Celsius was one of the first to withdraw its funds from Anchor, which led to a broader selloff on the platform.
Celsius stated that the only reason it removed its funds from the platform was that its management group spotted “changes in the stability.” The company also made sure to mention that it did not benefit from the resulting instability in any way.
Companies like Celsius accept deposits from customers and then lends that money to other users, which it then charges a fee. Celsius offers users returns of about 14%. This means Avalanche’s 19.5% yields were very attractive.
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Source: Cryptocurrency - investing.com
