Cake DeFi reassures customers as business immune to Celsius crisis
Cake DeFi has issued a statement to quell customers’ fears after the insolvency of Celsius rattled the cryptocurrency world. The Singapore-regulated firm said the current market conditions have little or no impact on its daily operations and explained why Cake’s business is immune to the events impacting the crypto lender.
Celsius, which at one point claimed more than $20 billion in assets, has paused all withdrawals, swap, and transfers between client accounts, blaming the move on “extreme market conditions.” Shortly after freezing accounts of its 1.7 million users, rival Nexo Financial announced an unsolicited acquisition offer to buy “any remaining qualifying assets.”
The Celsius move triggered a free fall across cryptocurrencies, with the total market cap dropping below $1 trillion for the first time in 19 months. Bitcoin also experienced a 14% tumble over the weekend to below $23,000, further undermining trust in the crypto space just weeks after the Terra collapse.
Today as we speak, Cake DeFi published a corporate statement to its group members, notifying them that Celsius’s ongoing crisis has nothing to do with its business and will not impact customers’ withdrawals.
“As usual, we are processing 99% of all withdrawals within 24 hours, even though some can take up to a maximum of 72 hours. In such uncertain times, exceptional service is of even greater importance. We therefore are working even harder than usual to ensure our services are working seamlessly,” the company said.
Explaining what actually sets them apart from Celsius and other competitors, Cake said it’s transparency and regulation.
As a Singapore-based fintech company, client assets are segregated in trust or custody accounts, which are designated for the exclusive benefit of Cake’s clients. This operation ensures that any funds sitting in these segregated trust accounts are available to be returned to customers in the event of the company becoming insolvent or bankrupt.
Standard regulatory requirements also include, among other protection standards, adequate capitalization and annual filings that can be easily accessed by applicants. Additionally, regulation provides reimbursement up to a statutory amount if the firm becomes insolvent and ensures it upholds rigorous standards as a financial service provider.
Furthermore, Cake DeFi acts as an agent or an intermediary for the services it provides. In simple terms, this means that it provides users a “safe passage” or access to decentralized finance (DeFi) products.
On top of that, Cake’s operations are living in a self-auditing state as all services are done on the blockchain. As a distributed database, all transactions, yields, master nodes and other key information are fully accessible and transparent.
“Technically, customers can make such transactions on the blockchain themselves. What Cake DeFi offers is a one-stop-platform where people can access all these services at a single point with customer and community support,” it added.
Cake DeFi upgrades regulatory profile
While the crypto community suggests that the Celsius collapse could take a bunch of customer money with it, Cake warns that CeFi platforms such as Celsius, Binance and Crypto.com are arguably likened to a “black box” which offers limited transparency and control to other entities other than itself.
“In parting, it is perhaps timely to warn industry friends against “picking up pennies in front of a steamroller”. Indeed, investment strategies that have the potential to make little returns while disregarding the big risks involved rarely result in anything good,” the statement concludes.
Cake DeFi made headlines last week when it secured a licence from the Registrar of Legal Entities of Lithuania. The approval enables the firm to provide crypto trading services in Lithuania and other European countries.
Despite the ongoing crashes in cryptocurrency prices, Cake DeFi has amassed over $1 billion of total customer assets and close to a million registered users. The platform opens up a barrage of opportunities for investors to earn steady passive income through staking, lending, and liquidity mining.
Cake DeFi has paid out $317 million worth of rewards to its users as of the end of first quarter of 2022. The platform has also launched a corporate venture arm with $100 million to invest in startups across Web3, the metaverse, the NFT space, gaming, esports, and fintech.