Platform Risk
Lending platforms may fail or restrict withdrawals.
What is this risk?
The crypto industry has seen major platforms collapse, taking user funds with them. FTX, Celsius, BlockFi, and Voyager are recent examples of platforms that failed, leaving customers unable to access their assets. When you deposit Bitcoin as collateral, you're trusting that platform to keep it safe, remain solvent, and return it when you repay your loan. Not all platforms are equally trustworthy, and even large, seemingly reputable platforms have failed.
Think of it this way...
“Leaving your Bitcoin with a lender is like handing your house keys to a property manager — if they disappear or go bankrupt, so does your access to your home. The difference is that houses can't vanish, but digital assets can.”
How to Protect Yourself
Practical steps you can take to reduce or manage this risk
Research the platform's history, team, and backing — look for platforms with transparent operations and strong track records.
Check if the platform is regulated and what jurisdictions' laws apply to your funds.
Look for platforms that offer proof of reserves and regular audits.
Diversify across multiple platforms to avoid having all your eggs in one basket.
Consider using decentralized protocols where you maintain more control over your collateral.
Keep an eye on industry news — warning signs often appear before a platform fails.
See This Risk in Action
Explore real-world scenarios where this risk plays a role
Key Takeaway
This risk can result in significant or total loss of funds if not properly managed.
Explore Other RisksOther Risks to Consider
Explore other risks to get a complete picture
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