Crypto DeFi: rug pull or bankruptcy? Freeway in turmoil

Citing market volatility, crypto platform Freeway halted all cryptocurrency withdrawals. Following this decision, the FWT token fell by more than 80%. Some parts of the crypto community claim that it would be a $160 million scam.

Ponzi or simple preventive measure?

It’s far from the first time this year that investors see themselves as victims of cryptocurrency promoters, rightly or wrongly. The scandal surrounding Britain’s Freeway platform is in many ways pushing the boundaries of the industry, and its creators seem to have profited from every excess.

Freeway falls into the category of small DeFi platforms. However, it has a lot of followers because it offers high returns: almost 43%!

To achieve such returns, the platform offers a “supercharger” system which involves depositing tokens into a crypto pool and earning rewards for it. In theory, users can withdraw the assets thus deposited at any time. Freeway has also created its own token, FWT.

Already on October 22, a tweet had appeared stating “If anyone has any funds on the Freeway crypto platform, I suggest you withdraw them immediately. I believe they are operating a Ponzi scheme. In my opinion it is likely that Freeway will collapse in the next few months and all users will lose everything [leur argent]. »

The following day, Sunday, the platform posted a message on Twitter indicating that the company was simply suspending the possibility for its users to recover their tokens.

With “market volatility” to justify the decision, the real reason for the shutdown may be much murkier. A few things suggest it could be a “rugpull” indicating that some team members left with the crate.

Among those, Freeway is removing the team from the site, according to a tweet from FatMan, a sleuth with the household names exchange platform. Specifically, the names of the team members (the people who run the DeFi platform) have been removed from Freeway’s website.

Freeway recalls Celsius case

Since the announcement of these events, the founding members have not communicated on any of their channels.

As such, most of the crypto community agrees that it will be a rugpull, with some members of the Freeway team scooping up the $160 million locked on the platform.

Decentralized asset markets have never been a model of stability, but the May 2022 crash further exacerbated this trend. Today, investors in the industry are increasingly wary on the lookout for the slightest signs of weakness to make a massive withdrawal of their funds.

Simple preventive measure to avoid bankruptcy or real rugpull time will tell us more. In the meantime, the FWT token loses no less than 80% of its valuation a few hours after this announcement.

The case is reminiscent of the celsius spell, a crypto lending institution that also froze withdrawals on its platform last June before filing for bankruptcy a month later. This is a grim prospect for users who cannot recover their deposits.

Freeway’s model caught the attention of financial and cryptocurrency analysts early on. Some even call it a Ponzi scheme. Pessimists, few saw the platform hold until 2023. It will not even have to wait until then.

Withdrawals are therefore suspended on the Freeway platform. But the explanation provided by this DeFi platform does not seem to justify this measure. Moreover, it struggles to convince users and members of the crypto community. For its part, Freeway does not wish to give more information.

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Crypto DeFi: rug pull or bankruptcy? Freeway in turmoil

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