Midas Investments Platform Closure

Notice: This page is a freshly imported case study from the original repository. The original content was in a different format, and may not have relevant information for all sections. Please help restructure the content by moving information from the 'About' section to other sections, and add any missing information or sources you can find. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.

Notice: This page contains sources which are not attributed to any text. The unattributed sources follow the initial description. Please assist by visiting each source, reviewing the content, and placing that reference next to any text it can be used to support. Feel free to add any information that you come across which isn't present already. Sources which don't contain any relevant information can be removed. Broken links can be replaced with versions from the Internet Archive. See General Tutorial on Wikis, Anatomy of a Case Study, and/or Citing Your Sources Guide for additional information. Thanks for your help!

Midas Investments Logo

The Midas Investments platform closed, with investors short by $63.3m - more than half of all invested assets on the platform. A final post by the CEO outlines where the funds were lost. There was some discussion of making up the difference through launching a new venture.

This is a global/international case not involving a specific country.

About Midas Investments

"Midas.Investments is a custodial crypto-investment platform for staking core crypto assets and DeFi tokens. In four years Midas.Investments got over 7000 investors all over the world and more than 200 million dollars in Assets Under Management (AUM). Investors receive access to the vast range of crypto-assets, swap feature, and yield-automated-portfolios on the platform, which makes Midas the go-to place to build the yield-generating portfolio."

"Midas has a vast variety of DeFi yield strategies, such as automated concentrated liquidity providing on Uniswap V3, token-incentivized liquidity pools, lending strategies, yield-bearing assets, and more. Each strategy is reviewed by the strict risk management policy and hedged from impermanent loss volatility or token depreciation. The funds are managed automatically through the non-custodial wallet infrastructure on Fireblocks, which has the best security features on the market."

"Midas.Investments have the long-term vision of providing users with a stable and profitable passive income source that would help them earn one of the highest yields on major cryptocurrencies such as BTC, ETH, and USDT. There is no minimum limit on deposit amounts or any lock-up periods.

The platform generates yield through hedged strategies which uses investment instruments such as lending and borrowing, hedged token farming, DeFi yield vaults, and concentrated liquidity provider on Uniswap V3 Midas.Investments intends to become a gateway between centralized and decentralized finances while also providing DeFi market exposure to investors and users."

"We are a team of innovators consisting of 65+ members. Our mission is to create the investment platform of the future which combines the best of the CeFi and DeFi ecosystems: the simplicity and accessibility of CeFi with the transparency and innovation of DeFi."

"I’m Trevor, the CEO of Midas Investments, and I am writing to you today with a heavy heart to announce that the Midas platform is closing down. In the spring of 2022, Midas DeFi portfolio suffered a cumulative loss of 50 million dollars (20% of $250 million AUM). After Celsius and FTX events, the platform experienced over 60% of AUM being withdrawn, creating a large asset deficit. Based on this situation and current CeFi market conditions, we have reached the difficult decision to close the platform.

Despite the damage that was done by this event, this is the only way to move forward for Midas to build something relevant to this new market. We aim to focus on a new project that aligns with our vision for CeDeFi. This project will be fully transparent, on-chain, and built with the goal of offering a new and improved investment experience."

"Over the past eight months, our team has been focused on identifying and capitalizing on opportunities to balance our assets and liabilities. This included launching CeDeFi strategies, seeking fundraising, and exploring opportunities with DeFi protocols. Despite these efforts, the extensive withdrawals due to the insolvency of Celcius and FTX, coupled with reduced yield opportunities on the market, made it impossible for us to cover daily payouts to users due to the assets deficit.

I want to clarify that only Midas C-level employees were aware of the asset deficit. The community team, marketing team, support team, IT team, and platform team were not aware of this issue. The asset deficit was caused by the long-term risk of DeFi investment, the instability of our business model after the loss of assets, and the illiquidity of the Midas token."

"I remember a lot of people here saying Midas Investments is the only good platform to keep your money on and earn. They are completely transparent and I trust them. So their token went from $38 to zero over night, their swap feature was shut off and they sent out that dreaded email nobody wants.

The one caveat though, is maybe they aren’t complete scumbags and have full liquidity for their customers. Because they state in the email people will be able to withdraw 100% of their funds. Just if you had it all in Midas, you’re hooped.

I know these guys weren’t very big, so a lot of you probably haven’t heard of them, but just another reminder to people still taking these big risks with these CeFi platforms."

"This is such an obvious Ponzi its remarkable how some people say otherwise.

They were offering high yields and when someone was cashing out they were dipping into other customer funds. So they didn't drain all the funds, but called it quits with returning 55% of assets to customers.

Still scammers, still scumbags, they just didn't wait till zero.

NEXO is NEXT-O!!! (eeeew, that pun is so bad, I am going to bed and remorse)"

"Decomposition of balance deficit:

$14 million Ichi protocol in April 2022 $15 million DeFi Alpha portfolio in Spring 2022 $1.5 million due to Harmony bridge hack $3 million due to FTM token’s price change $15 million due to balancing MIDAS token sells on an illiquid market $10 million due to paying higher rewards in native and MIDAS Boost than what was being earned through DeFi"

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Midas Investments Platform Closure

Date	Event	Description
December 27th, 2022 3:59:18 AM MST	Medium Post	Post from CEO on Medium about the closure.
December 27th, 2022 10:54:55 AM MST	Reddit Post	Post is made on Reddit.
December 27th, 2022 4:03:00 PM MST	CoinDesk Article	CoinDesk reports on the closure with losses to investors.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $63,300,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.