Bankruptcy scandals exposed centralized crypto risks, says Aly Madhavji

Blockchain technology is not just about putting traditional finance in a digital space — it’s fundamentally reshaping the entire financial system, said Aly Madhavji, founder of Blockchain Founders Fund.

Speaking with Rob Nelson on Roundtable , Madhavji pointed out that while many assume they are engaging with blockchain-based services, they are often dealing with centralized entities disguised as decentralized platforms.

“We had this movement a few years ago… but then a real mess-up. You had BlockFi, Celsius, Voyager, and FTX. They weren’t actually decentralized protocols, they weren’t decentralized technology, but people didn’t know better,” Madhavji said. “They thought they were really using the technology, but all of those were centralized products — the same as your banks or other things would be, but even less secure.”

He explained that when these centralized platforms collapsed, millions of users lost money, exposing the risks of trusting middlemen instead of true decentralized finance (DeFi).

Blockchain gives 1.7 billion people financial access

Beyond just disrupting traditional banks, Madhavji believes blockchain can solve a major financial problem — giving access to the 1.7 billion people worldwide who are excluded from banking services.

“I don’t think it’s okay for us to be like, ‘Oh, well, they just don’t make the cut.’ It’s 1.7 billion people. It’s a lot of people,” he said. “This is where blockchain really changes the game. It can not only serve the billions of people in the traditional banking system but also all of these people that right now are cut out, and this is their only solution.”

According to Madhavji, decentralized finance enables financial inclusion without requiring users to go through traditional banking gatekeepers. With blockchain, individuals can gain access to lending, borrowing, and savings products just by creating a digital wallet — no bank account necessary.

DeFi must be simple to succeed

Madhavji noted that platforms like Velvet Capital are making decentralized finance more accessible to everyday users, helping them invest in diversified vaults and pools without needing deep technical knowledge.

“They do it in a way that’s so much simpler. You don’t have to be an expert. You can get involved with a lot less knowledge and then use that as a way to learn,” he said.