As the industry continues to cope with fallout from the implosion of Three Arrows Capital, July has been a brutal month for crypto lenders, with both Voyager Digital and Celsius declaring bankruptcy, and other prominent lenders including Genesis, BlockFi and Blockchain.com incurring severe losses.
In the case of Celsius — which is now reporting a $1.2 billion hole in its balance sheet — retail investors have a long road to recovering any of the crypto they deposited in the platform.
In this episode of The Scoop, Domain Money founder and CEO Adam Dell walks through some of the fatal mistakes made by the recently collapsed crypto lenders and explains what a responsible approach to portfolio management looks like in the digital asset space.
In contrast to the way Celsius allegedly deployed users' funds into levered strategies, Dell says it is important that Domain Money remains market neutral:
"We don't take balance sheet risk. And so many of the entities you mentioned were using their clients' funds to basically take levered positions in the market."
Domain Money is also looking to differentiate itself through quality portfolio managers. Dell has brought in teams from Goldman Sachs and Bridgewater to help construct and manage portfolios in the hope that veterans from traditional finance will be able to use their experience to manage the volatility of the crypto market.
While the contagion stemming from Three Arrows Capital and rampant global inflation have caused crypto prices to plummet, Dell says this is healthy in the long-run:
"I'm a little bit conflicted in that I certainly want all of our investors to have positive returns in any timeframe, but I also think this is, in the long-term, a very good thing for this industry to go through to weed out the bad actors, to weed out the momentum and meme-focused investors, and have a set of investments thrive and grow over time that are solving real world problems."
Episode 64 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro and Adam Dell, founder and CEO of Domain Money.
Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.
This episode is brought to you by our sponsors Chainalysis & IWC Schaffhausen
About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.
About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com
The Scoop