CEO of Largest Cryptocurrency Trading Firm Says Big Mistakes in DeFi Turn Institutional Investors Off – and Put Retail Investors Most at Risk | Currency News | Financial and business news

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There have been some high profile errors on DeFi networks recently.

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Mistakes in DeFi are pushing institutional investors away from the space, said the CEO of large crypto trader Genesis. Michael Moro said the errors show DeFi is risky and retail investors are most at risk of losing money. Two high-profile DeFi mistakes recently led to hundreds of millions of dollars being sent to the wrong place. See more stories on the Insider business page.

High-profile mistakes in the DeFi world are driving institutional investors away from the booming industry, according to the CEO of one of the largest crypto trading companies.

Michael Moro, CEO of Genesis, a specialist in crypto lending and trading, said on Thursday that the errors highlighted risks with decentralized finance, or DeFi. And he said retail investors are at the greatest risk of losing their money.

A number of DeFi companies have been hampered by major errors in recent weeks. DeversiFi and crypto trading platform Bitfinex accidentally paid $ 24 million in transaction fees to send $ 100,000 worth of cryptocurrency to the ethereum network in late September.

The DeFi Compound platform suffered a glitch during a routine network upgrade and mistakenly started sending millions of dollars in crypto to users, putting around $ 160 million at risk according to the founder’s estimate. .

“The mistakes and mistakes that you have seen certainly make [institutions] afraid to do anything big, on a particular platform, ”Moro told Insider. He mentioned in particular hedge funds and proprietary trading companies.

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DeFi is the use of cryptographic technology to conduct traditional financial transactions without the need for centralized parties, for example, trader without clearing houses. Its proponents say it removes counterparty risk – the risk that one party to a deal collapses or fails to meet its obligations.

Still, Moro said DeFi introduces new dangers, such as the possibility that human errors or errors in code go unchecked.

Moro said retail investors dominate DeFi at the moment and are therefore the most at risk. “What is unfortunate is that, for the moment, because it is the consumers, it is the traders who walk on DeFi today, it will be them who will lose their money”, he said. declared.

“There is an element of trial and error for DeFi, where the error will cost over a hundred million dollars,” Moro added. “I don’t think we have a robust enough ecosystem of listeners. I think you still trust someone to have audited the code.”

Genesis is part of the Digital Currency Group, which also owns Grayscale, and is one of the largest crypto lenders and traders. It generated $ 25 billion in crypto loans in the second quarter and traded $ 29 billion in crypto.

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