The crypto giant's debt stands north of $2 billion, and it's threatening to destabilize the industry. Blame regulators and reckless venture capital firms for contributing to the problem.
But not in crypto. Companies like Celsius and FTX maintained basically zero accounting standards, using spreadsheets and WhatsApp to manage their corporate finances and mislead investors. Citing “security concerns,” Grayscale has even declined to open their books.
Second, venture capital firms need to perform proper due diligence on companies and cryptocurrencies. Institutions and retail investors alike — and even journalists — turn to VCs as gatekeepers. They see investment flow as a sign of legitimacy. VCs have too much money and influence to fail to identify basic scams, con men and Ponzi schemes.
DeFi also removes human middlemen from the system. What's more, if entities want to overleverage themselves, they can do so only under the strict rules of an automated smart contract. When a loan comes due, the contract automatically liquidates the user and prevents an entity from taking down an entire industry.
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