Embattled Crypto Yield Platform Offers Vague ‘Recovery Plans’
Freeway, a yield strategy platform, has shed some light on the reasoning behind a suspension of services earlier this week.
On October 26, Freeway posted an update explaining why it had taken action. Earlier this week, the DeFi yield platform cited unprecedented volatility in crypto markets and suspended its services.
The firm blamed a failed trading strategy for causing “significant losses due to unexpected market volatility.” It added that the problem was exacerbated by the rising USD.
This volatility caused an “increase in margin utilization leading to losses,” according to Freeway.
It added that the specific strategy was used in the beta version of the Earn and Protect product and had stop losses in place.
Recovery plans for highways
The trading loss dramatically affected Freeway’s portfolio. However, steps were taken to ensure remaining security. Freeway did not describe the amounts or assets, but the firm said it had already exited the loss strategy.
Freeway is running multiple recovery plans. It also hired third-party advisers to help. The first plan is to manage and expand existing funds; again no details were given. The second plan involves diversification, and the third involves “deployment of large new funds in an entirely new product with impressive projected profitability.”
The plans were very vague with no specifics provided for customers who are now in limbo. Still, it warned that things would not happen quickly.
“In order for us to resume buying back Supercharger, we need to be in a position to execute safely. We will therefore need to see significant cuts to losses before that can happen, and that will take time.”
Freeway offers eleven crypto “Supercharger” trading strategies that it claims can earn up to 43% returns. Customers could buy the strategies with crypto-security and sell them back to Freeway. However, on 23 October it announced it was no longer buying them back, sparking speculation of a blanket move.
No recovery for native token
The platform’s native token, FWT, has shown no signs of recovery since the suspension notice. It was trading flat on the day at $0.0015 at the time of writing, according to CoinGecko.
FWT has fallen almost 80% since before the announcement when it was trading at around $0.0070. Furthermore, the battered token is now reeling 95% down from its May 2021 high.
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