2022 “bent” cryptos: The five biggest bankruptcies

2022 has been sweeping for the cryptocurrency market, which started the year with a valuation of around $2.2 trillion. dollars to slide 12 months later close to the level of 811 billion.

The market peaked in November 2021, briefly reaching $2.9 trillion. dollars, but since then, investors have started to react more strongly to any sign of danger. The crypto market took its first hit with the outbreak of the war, which however led to manageable losses. Then, as central banks around the world began to effectively end the era of loose monetary policy, the market shrank continuously for three months.

Huge was the blow in May with the collapse of TerraUSD, the algorithmic stablecoin created with the aim of being “pegged” 1 to 1 with the dollar. Now, after repeated bankruptcies of companies in the sector, investors show less and less willingness to revive the market.

Here are the five bankruptcies that caused the biggest shocks in the crypto market:

5. Voyager Digital

Voyager Digital buckled under the weight of the collapse of Three Arrows Capital, the cryptocurrency hedge fund it had huge exposure to. In June, just one week apart, Voyager Digital froze customer deposits and filed for Chapter 11 bankruptcy protection, saying it has $5.9 billion in assets and liabilities of 1- 10 billion dollars. The company also had about $1.3 billion in cryptocurrencies on its platform and about $350 million in cash that it holds on behalf of its customers in a bank.

4. Celsius Network

Also in June, Celsius Network “froze” withdrawals and transfers between accounts, citing extreme conditions in the cryptocurrency market. Cryptocurrency lending, which Celsius was active in, had been sinking for months following the crash in prices and the collapse of the TerraUSD token. So in July, it filed for Chapter 11 protection from creditors. The company said it had $167 million in cash to fund some operations while the restructuring process continues. At the same time, it estimated its liabilities at 1-10 billion dollars.

3. BlockFi

One of the last bankruptcies of the year, but it was only a matter of time before it happened. Just a year earlier, the company had a valuation of $4 billion, but in July this year it began to show losses on loans it had made to bankrupt Three Arrows Capital. BlockFi was bailed out by FTX, which a few months later also collapsed, leaving BlockFi exposed. In early November, he was forced to “freeze” loans and withdrawals, and after a few weeks he filed for bankruptcy. BlockFi had between $1 billion and $10 billion in assets and liabilities, with more than 100,000 creditors.

2. Tether

In May, the world’s largest stablecoin, TerraUSD “unpegged” itself from the dollar, with which it was built to have 1-to-1 parity, sending panic across the cryptocurrency market. Investors rushed to pull nearly $3 billion from the Tether cryptocurrency, which also slipped below $1 where it was “pegged.” Although it caused chaos, the Tether story had a relatively good ending, because with cash and short-term support, it was able to cope with demand and eventually return to 1-to-1 with the dollar.

1. FTX

Once one of the largest cryptocurrency exchanges in the world, FTX filed for bankruptcy in mid-November, upending the success story of its founder, Sam Bankman-Fried, who is now facing serious fraud and conspiracy charges in the US. FTX quickly collapsed after the value of its own token, FTT, slipped as users rushed to liquidate their investments. First, it became known that FTX will be rescued by its big rival, Binance Holdings. However, in the end, Binance backed out of the deal, in the face of the size of the FTX “black hole”.

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