Lending: The Risks Of Not Holding Your Crypto

Scott Cunningham
4 min readJun 20, 2022


With so many hacks, bankruptcies, and now supposed crypto liquidity issues on exchanges, you should never leave your crypto on exchanges or any platforms other than your own wallet. Let’s talk about Celsius & Solend.




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Recently Celsius halted all withdrawals and transactions from their platform. I know this feeling all too well with Cryptopia locking up over 1 million DOGE a few years ago for me that I would never see again. Some people like myself had to learn it the hard way, but through our experiences hopefully others will learn the easy way.

I’ve said for a long time that to avoid any issues around ownership and truly embrace decentralization you should own your crypto in your own wallet. This means no lending or anything of this nature, it’s not safe. Time and time again we have seen even massive platforms having to halt transactions. Binance recently paused Bitcoin trades and withdrawals for just a few hours.

Coffeezilla did a good breakdown of the Celsius collapse here: https://youtu.be/1nVG8PF4ECU — the main he touches on that I wanted to note was that Celsius had it in their terms and agreements that you were always lending to them and then they were lending out your lent cryptocurrency. This means they had special ways to get around actually having to collateralize your cryptocurrency and made it extremely risky with leveraged lending that is continually lent through multiple channels for the highest, riskiest yield possible.

Recently after Celsius did this so did Babel Finance, a similar lesser known entity that does crypto lending etc. Luckily, Nexo is talking about taking on their accounts, but we will see what happens. With the market in a free fall one has to wonder what will happen to Blockfi or Crypto.com who has invested way too much of their money into marketing while their CRO token has plummeted nearly 90% from its all time high. While most cryptocurrencies are suffering, those leveraged with debt may all come crumbling down and the money used to back that may be lost too. Look no further than Celsius’ pinned tweet — https://twitter.com/CelsiusNetwork/status/1536169010877739009.

The reason I’m writing this is simply another reminder that we need to keep our crypto in wallets that we control, preferably hardware wallets. We do this to avoid any possibility that your crypto could be misused or that anyone else even has access to it other than you.

It’s not even just lending platforms, sometimes it’s the way entire chains operate. This can be seen with the latest happenings on Solana’s blockchain with the proposal to give Solend Labs emergency powers to take over a user’s account in order to liquidate their 170 million dollars worth of SOL. Since this would result in 46% on chain slippage, they want to do it via an exchange. The only way to achieve this would be to literally take the users funds and do it themselves so they are voting on whether or not to grant full emergency powers. Anything that touches lending is very risky and this is so clear to see that even though this is related to lending, the entire chain itself is at risk and willing to give 100% centralized powers over to a Solana entity. This shows how risky anything related to lending can get and why you should stay as far as away from lending crypto as possible. This tweet gives a great explanation of what’s happening with Solana — https://twitter.com/45BillionCrypto/status/1538534849958625280.

The more closely a cryptocurrency is tied to lending, the riskier it is. We already saw this clearly with Terra’s LUNA and the Anchor lending protocol, so it should be clear why something like Solend isn’t going to be any safer.

Don’t learn the hard way, go through the extra effort to secure your crypto. For me it cost almost 100K to learn this lesson, I hope for you it won’t cost anything. It’s always made me cringe to see popular finance gurus recommending people use platforms like Blockfi to earn interest on their Bitcoin without explaining that you could lose everything because of it.




Have you ever lost crypto like this? Were you affected by the Celsius issues? Do you lend your crypto on any platforms? Let me know what you think about this in the comments below and don’t forget to subscribe!

*Disclaimer: This is not financial advice and is purely for entertainment purposes. What you see, hear, or read is my personal opinion, and any statements made are based on my views and should not be misconstrued as fact. My crypto portfolio may or may not be simulated*

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Scott Cunningham

I am a social blockchain enthusiast that blogs and vlogs on what I believe to be the next level of social communication. https://www.scottcbusiness.com/


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