The hardest-hit companies by the cryptocurrency crash
A number of cryptocurrency businesses have declared bankruptcy or had to hunt for quick capital injections.
Fears that interest rate increases will put a stop to the era of cheap money have had a significant negative impact for cryptocurrencies, with bitcoin, the largest digital asset in the world, down more than 56% from its high this year. A number of cryptocurrency businesses have declared bankruptcy or had to hunt for quick capital injections.
Three Arrows Capital
Three Arrows Capital (3AC), a Singapore-based cryptocurrency hedge fund, submitted a Chapter 15 bankruptcy petition on July 1.
The collapse of 3AC, formerly a dominant force in the digital asset market, looked to be related to the company’s wager on the Terra ecosystem, which was the driving force behind the unsuccessful stablecoin terraUSD. In May, that token’s value nearly vanished completely, erasing nearly $500 billion from the cryptocurrency market.
Due to its high level of leverage, 3AC was unable to satisfy counterparties’ demands for margin payments. BlockFi and Genesis Trading, two crypto lenders, sold their positions with the company as a result. Creditors of 3AC assert that they are owed more than $2.8 billion, according to court documents.
On June 12, the New Jersey-based cryptocurrency lender Celsius halted withdrawals and, a month later, declared bankruptcy under Chapter 11 with a $1.19 billion loss on its financial sheet. It underwent a fundraising round in October when its worth was set at $3.25 billion.
Celsius made a mistake with complicated investments in the wholesale market for digital assets. The company struggled to meet redemptions as cryptocurrency values fell, despite having promised regular investors yearly returns as high as 18.6%.
Celsius’s attorneys said that the company’s bitcoin mining operations could give it a way to pay back customers at its first bankruptcy hearing.
According to Reuters, many state regulators are looking into Celsius’ move to halt customer withdrawals.
The New Jersey-based cryptocurrency lender Voyager Digital had been on the rise, with a market worth of $3.74 billion as of last year. However, Voyager, which had a significant exposure to the hedge fund, was severely harmed by the collapse of 3AC. More than $650 million in claims have been made by Voyager against 3AC.
On July 6, Voyager announced that it had $110 million in cash and crypto assets on hand when it filed for Chapter 11 bankruptcy. Ever since, the U.S. The Federal Deposit Insurance Corporation has acknowledged that it is looking into how Voyager promoted deposit accounts for bitcoin purchases as being FDIC-insured.
With the exception of its debts to 3AC, Sam Bankman-cryptocurrency Fried’s exchange FTX and Alameda Research offered to buy all of Voyager’s digital assets and loans and allow its customers to withdraw their funds from an FTX account. In a court filing, Voyager, however, rejected that offer, calling it a “low-ball offering.”
After banning withdrawals days earlier, the Singapore-based cryptocurrency lender Vauld filed a petition with a Singapore court on July 8 seeking protection from its creditors. A report from The Block claims that the corporation owes its creditors $402 million.
Investor billionaire Peter Thiel’s Valar Ventures, Pantera Capital, and Coinbase Ventures support Vauld.
In a blog post on July 11, Vauld stated that it is looking at possible restructuring options while also talking about a potential sale to London-based cryptocurrency lender Nexo.
BlockFi, a cryptocurrency lender, inked a contract with FTX on July 1 to get a $400 million revolving credit facility and an option for FTX to acquire BlockFi for up to $240 million. BlockFi was facing an increase in withdrawals and a hit from 3AC at the time.
BlockFi, which was severely impacted by the crypto crisis, introduced a number of cost-cutting measures in June, including a 20 percent employment reduction and a reduction in CEO remuneration. A investment round held last year resulted in a $3 billion valuation of the business.