Kathleen Breitman, the co-founder of decentralized open-source blockchain platform Tezos, has said the current happenings in the crypto market, like companies filing for bankruptcy, should not come as a surprise.
Speaking during an interview with Bloomberg Technology on July 15, Breitman cited the case of crypto lending platform Celsius noting that the decision to file for bankruptcy is expected in the cryptocurrency market since some entities are established on weak foundations.
According to Breitman, the market correction is beneficial in the long run for weeding out businesses with no chance of survival.
Crypto businesses with weak foundation
She noted that the number of entities likely to collapse would increase, stating that they are founded based on a theory with no practical aspect.
“It’s completely unsurprising that something like Celsius would go bankrupt because economics does have laws that transcend the word blockchain. <…> I think we’ve just seen a lot of shakeout from things that just wouldn’t have worked, and you really can’t make a sustainable protocol or business based on the theory, that number will always go up,” said Breitman.
The executive also referred to the Three Arrows Capital firm that filed for bankruptcy, noting that the company’s business model was risky and doomed to fail. She termed the model ‘uniquely bad’ with no chance of surviving.
More crypto companies collapse
Besides Celsius and Three Arrow Capital, another crypto lender, Voyager, has since filed for Chapter 11 bankruptcy protection following significant losses.
Notably, businesses like Celsius have taken a hit from the market correction resorting to seeking bankruptcy protection. The move emerged just weeks after freezing customer withdrawals citing challenges with liquidity.
As reported by Finbold, the bankruptcy filing meant that several investors had lost life savings with no indication of getting back their money. Interestingly, Celsius maintains that there is a chance to rescue the business after implementing several options like restructuring and laying off staff.
Apart from battling to gain stability, Celsius is also facing a lawsuit from a former employee who alleges that the company was run as a Ponzi scheme. The lawsuit by Jason Stone claims that Celsius lacked enough consumer protection mechanisms, a factor that contributed to the recent fall.
Watch the full interview below: