Second, investing in DeFis carries risks, for example the risk being scammed or hacked. Meanwhile they pay out 5.26-6.72% APY on ETH to their retail customers. It is highly unlikely that this is the case.ДЇirst the yields you get on most DeFi protocols are lower than what Celsius is paying.ДЇor example this research has revealed that Celsius placed almost half of its ETH holding with Compound and AAVE, generating less than 1% APY. DeFi investmentsД¬elsius claims to generate profits by placing crypto assets in DeFi protocols. But even with rehypotication it is highly questionable if Celsius could be generating a profit here. This practice is extremely risky and has been responsible or at least partially responsible for the subprime crisis. Yet Celsius claims to be profitable on this by вЂњrehypothecatingвЂќ the collateral. Less than what they pay back to their вЂњinvestorsвЂќ ( 10-12.68%). The interest rate for these loans is between 1% to 8.95%. It is possible for customers to take out USD stable coin loans from Celsius, under the condition that they provide a Bitcoin or Ethereum collateral of at least twice the value of the loan. In other words: Is Celsius lending money to itself? 2. While Celsius's CEO Alex Mashinsky has assured that these loans are fully collaterized, his former CFO - the actual one is suspended after having been arrested a few weeks ago on fraud and money laundering charge - has stated that this is not the case ( Source).ДЄlso it is unknown what the collateral exactly is nor if these institutions could be a related entity. Institutional borrowersДЄccording to Celsius most of its income comes from institutional borrowers paying between 7 to 15% interest ( Source)Д¬elsius has never revealed the name of a single of these institutions nor their creditworthiness. 'Banks are not your friends', 'Banks generate those yields but they keep it all for themselves', 'We give back 80% of what we make back to the community', 'When I was a child banks used to also give you 10%, now they have figured out that they don't need to', 'If you look at their earnings report you will see that they also make 10% ROI per year', 'We are the real robinhood'.ДЄ classic Ponzi narrativeвЂ¦ So, how does Celsius generate these yields?Д¬elsius is very vague when asked to explain how they magically create double digit returns, but they have repeatedly evoked these 4 methods : 1. When asked how Celsius outcompetes traditional finance their answer often includes: 8% APY if you invest in CCC rated junk bonds. The obvious question everyone should ask theirselves, is how can Celsius achieve such high yields when at the same time you get around: Sounds too good to be true? It certainly is! Celsius outcompetes traditional finance by a factor 20x to 100x Its flagship product: 10 to 12.68% annual returns on USD stable coins and this with little to no risks. With over $20b in assets under management Celsius Network is the biggest centralised lending platform in the crypto space.

Max keiser alex mashinsky