A recent tweet by user @antiprosynthesis.eth has sparked discussion regarding the nature of "Bitcoin's DeFi," critically labeling past centralized crypto lenders BlockFi and Celsius as an "absolute joke." The comment underscores the ongoing debate about the centralization of some crypto services versus the decentralized ethos of true DeFi, especially in light of the significant financial collapses experienced by these platforms.
BlockFi, which filed for Chapter 11 bankruptcy in November 2022 following exposure to the FTX collapse, has since emerged from its restructuring. The company is actively distributing funds to its creditors, with reports indicating that some allowed claims are receiving 100% recovery. However, a significant portion of non-U.S. customers had yet to claim their distributions as of May 2025, with a May 15, 2025 deadline for claims.
Similarly, Celsius Network, which halted withdrawals in June 2022 and filed for bankruptcy in July 2022, has also exited Chapter 11 proceedings. As of February 2026, Celsius announced its fourth distribution, allocating $344.4 million to eligible creditors, with total distributions exceeding $3 billion. The company's former CEO, Alex Mashinsky, was sentenced to 12 years in prison in May 2025 after pleading guilty to commodities fraud.
The failures of BlockFi and Celsius, along with other centralized lenders like Voyager Digital, were largely attributed to high-risk lending strategies, market volatility, and significant exposure to other failing entities within the crypto ecosystem. These platforms, while offering attractive yields on crypto deposits, operated by pooling customer assets and lending them out, a model that contrasts sharply with the peer-to-peer, smart-contract-driven nature of decentralized finance (DeFi). True DeFi protocols aim to remove intermediaries, relying on transparent and immutable code.
"@WuBlockchain @adam3us Bitcoin's 'DeFi' was BlockFi and Celcius. What an absolute joke."
The tweet from @antiprosynthesis.eth highlights a common criticism that such centralized entities, despite operating with cryptocurrencies, fundamentally deviated from the core principles of decentralization often associated with Bitcoin and the broader DeFi movement. Their collapses served as a stark reminder of the counterparty risks inherent in centralized financial services, even within the crypto space, leading to billions in customer losses and increased regulatory scrutiny. The ongoing distributions from both BlockFi and Celsius represent the final stages of a tumultuous period for the crypto lending sector.
