The guilty verdict handed down yesterday to Alex Mashinsky, founder and former CEO of Celsius Network, marks another significant milestone for the cryptocurrency lending industry. While exposing past mistakes and shortcomings, this case also signals the beginning of much-needed reforms within the turbulent digital asset ecosystem.
Masinski's guilty verdict brings to light the fundamental issues that platforms similar to Celsius have frequently encountered. At the core are reckless risk management, a lack of transparency in communication with customers, and excessive reliance on risky financial engineering techniques. In particular, the practice of reusing collateral for loans or investments exacerbated vulnerabilities during market downturns, ultimately leading to widespread distrust and large-scale failures.
In this context, Seamus Roach, CEO of Xapo Bank, a Bitcoin-based retail bank, stated, “Alex Makin's guilty verdict is a clear signal of how far the digital asset lending sector has come,” and added, “The core issues exposed by the Celsius collapse revealed structural flaws in risk management and communication.” These events have catalyzed for the industry to reflect on itself, and have played an important role in reemphasizing the fundamental principles of “transparency,” “prudence,” and “customer protection” alongside the reevaluation of lending protocols. Principles that were overlooked during the rapid expansion are being revisited, and new standards are taking shape.
In the past, many cryptocurrency lending institutions were blinded by short-term profits and engaged in reckless, aggressive behavior. Exaggerated advertising and high interest rates blurred investors' risk awareness, and many failed to properly recognize the structural vulnerabilities they had created. Following the crisis, the industry and regulatory authorities have begun re-examining the fundamental principles of digital asset lending, with a growing emphasis on collateral management, risk assessment, and transparent communication.
The market is now focused on restoring trust through responsible and safe practices. Seamus Roca notes, “While demand for Bitcoin-backed loans remains strong, this time around, companies that are building trust the right way are leading the charge,” emphasizing a focus on secure asset storage, risk mitigation, and clear communication.
Zapo Bank has also adopted a safer lending approach instead of re-collateralization and recently launched a BTC collateral loan product worth up to $1 million, positioning itself at the forefront of the industry. The core of this change is to restore market trust by providing liquidity while safeguarding customers' assets. Customers can maintain ownership and control of their BTC while transparently storing it and securing liquidity. This is the key to addressing the fundamental issue of trust that led to the collapse of Celsius. Market demand is also clearly shifting. Flexible yet secure cryptocurrency collateralized loans are becoming an attractive option for institutional investors, high-net-worth individuals, and individual investors alike.
The financial services currently being launched adhere to the stability principles of traditional finance while being designed to suit the digital asset market environment. They focus on building trust by clearly defining custody, management, and recovery mechanisms, and transparently setting the loan-to-value (LTV) ratio.
Of course, the painful yet valuable lessons learned from the Celsius incident serve as a reminder of the importance of building a stronger foundation. The industry is now moving toward a more responsible, transparent, and customer-centric lending model. This approach not only mitigates risks but also serves as a powerful tool for rebuilding customer trust. In particular, Bitcoin-backed loans differ from traditional loans in that customers retain ownership and control of their assets while ensuring they are securely stored and providing liquidity. This addresses the core challenge the industry faced following the Celsius incident—namely, restoring customers' trust in the safety of their assets.
Additionally, the market is undergoing a restructuring centered on safer and more responsible financial practices. Rather than recklessly pursuing profit maximization, the industry is now focusing its efforts on protecting customer asset value and establishing transparent operating principles. These principles are becoming core values that the industry is naturally emphasizing as it embarks on a path to renewal. Regulatory agencies are also aligning themselves with this trend, establishing stricter and clearer regulatory frameworks to guide the industry toward healthy growth.
The most important factor in establishing these changes is the restoration of “responsibility” and “trust.” Trust cannot be built overnight, but if an environment is created where customers' assets and information are managed safely and disclosed transparently, the foundation for trust will gradually become more solid. The industry is already moving in this direction and will continue to innovate with the safety and convenience of customers as its top priority.
Looking ahead, the industry will continue to play an important role. For the digital asset market to become a core pillar of the global financial system, maintaining trust is of utmost importance. Responsible and transparent lending and financial services will ultimately drive market growth and lay the groundwork for a healthy overall industry ecosystem.
In that sense, the review and redesign triggered by this incident will ultimately serve as a foundation for a stronger and more stable future. The future depends on responsible financial practices based on trust. As the industry continues to evolve, sustainable growth without further crises will be possible if we prioritize customer interests and strengthen regulation and cooperation.
And in this process, reestablishing the financial ecosystem in a responsible and transparent manner is clearly the ultimate goal we must strive for. For the industry to take the next leap forward, these principles must serve as the foundation. When that happens, digital finance will achieve true innovation and establish itself as a core powerhouse in the global financial market.
