Tether’s recovery of an $840M loan scrutinised in Celsius bankruptcy

> "One of the things that’s going to be examined is whether or not Tether was fully secured. Did Tether properly perfect its security in its collateral?,” said Tad Davidson, co-head of the bankruptcy practice at Hunton Andrews Kurth

This is interesting! Overcollateralised loans with automatic liquidation are neat. It's draconian. And there's the oracle problem. But that creditor friendliness should translate into lower swap-adjusted rates. (Should. Eventually. Imagine borrowing in a country with a volatile currency and the death penalty for defaulting. Also it's Argentina?)

But just because the blockchain says you control someone's collateral doesn't mean you own it. Control is a physical concept. Ownership is legal. And the law says you have to perfect [1] for collateral claims to survive bankruptcy. (Which has public disclosure and orderly-unwinding benefits.) Blockchains can ignore courts. But people aren't on blockchains.

Sympathetic to both sides. The spirit of the agreement was clear ex ante to Celsius and Tether. But it may not have been to Celsius's customers.

[1] https://en.wikipedia.org/wiki/Perfection_(law)

What people don't realize about cryptos and the current state (of crypto markets) is that the current downtrend is part of a larger cycle where for a period of time new players come into the ecosystem, launch lots of new projects, and then most of the get wiped out when people realize that the model behind the project isn't viable or just crashes.

First we had the shitcoins wave when everybody and their doge forked bitcoin. Few of them survived

Then came the ICO era.

Now it's NFTs and "not banks" like Celsius and other companies that move token custody from on-chain to a "trust me bro" agreement.

"Do i loose control of my tokens at any point ?" - on this Defi era, this is the most important question to ask before depositing your tokens in a contract