Alex Mashinsky, Celsius CEO, interview: Is Crypto Lending & Borrowing a good idea? Find out!
The host of InvestAnswer commenced the podcast by sharing the success story of his YouTube channel and expressed his gratitude to his subscriber for support. He further revealed that he had set up a referral link to Celsius and now he will be making charity out of the money that he earned through referrals.
The CEO of Celsius, Alex Mashinsky joined him through a video call and the host stated that he has around 30 questions for him. He started by asking about the CeFi and Defi to which Alex replied that both have the same purpose and that is to improve the traditional financial system as the yield is not enough as compared to what CeFi is offering. He also believes that CeFi is much better than DeFi as it has 5 sources of yield.
The host told him about twitter’s pool in which he asked whether you would risk 10 BTC with yields of 0.93% on BlockFi and the 87% of the audience said “No”. Alex stated that they had reduced the rates by 90% whilst Celsius has come up with a unique consensus algorithm called Proof of Community through which users can verify the rewards by comparing it with others pools of blockchains.
InvestAnswer’s host also revealed that the Celsius average deposit is decreasing as the Crypto grows. Alex Mashinsky accepted the scenario and stated that he is making efforts to push the deposit number.
The next question was related to the future of Celsius and its impact on the traditional finance system. the CEO confidently replied that they are not willing to become a bank but more like Costco where everyone can seamlessly get the best financial deals. He also referred to the traditional finance system as “Sick” as it doesn’t provide real value for yield.
The next question was if Celsius thinks of Aave which is a decentralized lending platform as a threat to CeFi or both can pioneer at the same time. Alex said that they are not competitors at all but they can be considered as “friends”. The reason is that they both reach out to each other in time of need. Further, DeFi and CeFi have the same goals of pioneering traditional finance so there’s no need to compete against each other.
The host also brought up the breakup between Celsius and Prime trust. The CEO stated that it has nothing to do with the security and they were receiving a lot of complaints on Twitter that users are not able to withdraw their funds. However, the fault was not from the Celsius end but it was receiving the backlash due to which they had to opt for another option.
Next to that, the CEO was asked what would happen if the tether blows up. He stated that the industry has already faced the same scenario in which the major coins like Bitcoin and Ethereum went down by 50% but it wasn’t severe. He also revealed that there were no liquidations in Celsius and the traditional system can’t survive such crashes as they are highly leveraged.
The host asked for the CEO's advice for crypto lenders and borrowers. He advised not to go for leverage as it had already turned off a great number of users from crypto. It was further enquired what was the procedure of liquidating customers if the price went below called margin. He stated that Celsius gives their customer the opportunity to save themselves from being liquidated by informing them so that they can save their assets. He also mentioned that if the customer won’t respond or make any transaction, then they won’t have any other option but to liquidate them.
InvestAnswer’s host also come up with an interesting question that what would happen if a bad apple from his organization wreaked havoc on Celsius. He said that in 4 years, there has not been a single incident and he prefers to check the background of the employees to make sure that it becomes a safe space. Further, he has global standard risk management for Celsius.
Another question was that what would happen if the UK regulators bans Celsius and what would Alex like to advise his audience. He said that what Celsius is doing is totally legal but if there’s any change in the law, then he will be taking action accordingly. Further, he said that moving to the US from the UK doesn’t bring a difference in their service.
The host asked why there’s a difference between rates for every country to which Alex replied that it is due to varying regulations as they have to make changes according to the law of specific regions. The CEO was also asked if Celsius will shape the future of regulations and he revealed that he is connected and filed with various regulators. Plus, he has a team of lawyers to guide him.
Alex Mashinsky was questioned whether he will be opting for FDIC insurance or not just in case black swan or any other financial crisis happens. He answered they are not going to ensure Celsius and he don’t intend to be part of that.
The host brought the topic of special cards with Visa and Alex stated that he was astonished that they have agreed to this program. He also stated that it is in the interest of Celsius customers as they will be able to use their assets for personal expenses. Alex also provided an insight into the possible experience that users will get.
The host asked if there’s someone who shouldn’t use their products and he answered that it is traders because Celsius is only for the holders. Alex stated that he thinks of regulatory as the biggest risk because it can shut down the operations from an entire country when he was asked about his opinion on the biggest threat to Celsius.
The host asked Alex to consider that Celsius doesn’t exist and his mother had 10 Bitcoin, would he advise her to invest them on BlockFi for 0.93 return per annum considering the counter party risk. He said that he would prefer Coinbase over BlockFi.
The last question of the host was what is Alex’s retirement plan like 100 million customers or 10 trillion in assets under management. He shared his story about Ukraine and showed his gratitude to the US for saving jews and his family. So, he mentioned that he has come to the US to pay back and he doesn’t plan to retire and aims to continue the job.
In the end, the host mentioned that he pledges to donate money that he will earn through the Celsius referral link and bid farewell to the guest.