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The pandemic saw a boom in cryptocurrency while people were locked up in their homes and turned to trading and investing. This led to an increase in the number of crypto firms that allowed people to trade and store their cryptocurrencies.
Since crypto grew in popularity, there have been many fluctuations in the value of the different cryptocurrencies which many believe is a common occurrence in the crypto market as well as the crypto firms.
However, as luck would have it, many of these crypto firms including some major ones have collapsed and declared bankruptcy which has adversely affected the customers who trusted their firms with their finances.
5 Major Crypto Firms that Collapsed in 2022
Crypto Collapse: 5 Major Crypto Firms that Bit the Dust in 2022
Here’s a look at five of the major crypto firms that collapsed in the first half of 2022:
1. Voyager
Voyager is one of the latest crypto firms to have collapsed in the digital asset market. Since the market began to crash in April, Voyager Digital has joined the list of other crypto firms that have suspended withdrawals from their platform. Voyager has filed for bankruptcy with assets and liabilities that estimate between $1 billion and $10 billion.
The firm’s CEO has stated that the collapse was caused by two main issues. The first reason is high inflation and rising interest rates which have caused the prices of crypto to come down. The second cause for the collapse was a loan to another crypto hedge fund that totaled $650 million. The firm also released a statement saying that it has approximately $1.3 billion of crypto on its platform and holds more than $350 million in cash on behalf of customers.
Although the firm has filed for bankruptcy, they have a restructuring plan in place which will allow all its customers to be reimbursed. This plan states that the firm’s customers would receive a combination of crypto into their accounts from the proceeds to be recovered from the loan given out and the shares of the newly reorganized company.
2. Three Arrows Capital
Three Arrows Capital recently crashed after a $650 million default on a loan to Voyage. This Singapore-based firm is another one of the latest casualties of the crypto crash that started in April of this year.
Three Arrows Capital, or 3AC, was deeply invested in other troubled cryptocurrency projects and even had sizeable investments in other cryptocurrency assets which have seen a 60% fall in the first half of the year. 3AC has brought Teneo, a restructuring firm, on board to help them deal with the liquidation process.
The restructuring firm has taken steps towards realizing 3AC’s assets and set up a new website to help creditors get in touch to make any kind of claims. One of the other causes of the firm’s collapse is the recent slump in digital currency prices which has led to billions of dollars being wiped off the market. In an effort to recover funds, the 3AC has issued a new crypto token which they promise will pay an annual interest rate of 20% to investors.
3. Vauld
Vauld is another crypto-based firm that has suffered a crash and has had to suspend operations. The firm has had to recently suspend all withdrawals, deposits and trading on its platform only a month after laying off 30% of its workforce.
Users of the firm have also withdrawn over $197 million after they saw a start to the crash of the market. Vauld is an asset-backed lending and borrowing platform which has seen a large and adverse effect from the recent crypto market crash. The current market climate led to a significant amount of customer withdrawals triggered by the collapse of other crypto firms which led to the firm’s crashing.
The founders of Vauld are looking for restructuring options for financial and legal advice with the intention to apply for a moratorium in the courts in Singapore. The firm hopes that the advisors will be able to help them reach a solution that will protect all the customers and stakeholders of the firm.
4. Celsius
Celsius is a billion-dollar crypto firm that has also recently collapsed in the wake of the market crash. The firm has recently filed for bankruptcy following a major crash in the market. All withdrawals and transfers between accounts have been paused because of the extreme market conditions which seem to have affected many other crypto firms.
This action would have allowed some customers to be paid back in full while others were left behind waiting for the firm to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery. The firm claims to have been less risky than a bank with better returns and will be restructured as soon as possible.
It is one of the largest cryptocurrency lenders in the market and has even amassed over $20 million in assets while also offering high-interest rates which were halted once the collapse began. The firm’s co-founder looks to strengthen the future of the firm after petitioning to continue to operate.
5. Babel Finance
The recent slump in the crypto market has led to yet another crypto firm collapsing. Babel Finance has recently temporarily suspended the withdrawals and redemption of crypto assets because of the crash in the market and valuations plunging as investors dump risky assets.
This Hong Kong-based crypto firm scrambled to pay its clients after the slump in the digital currency market. Although the firm only had 500 clients and dealt with a limited number of cryptocurrencies, they were able to raise $80 million in funding which brought 2021 to an end with $3 billion of loan balances on their sheets. Babel Finance is now looking to hire a restructuring specialist to help them plan all the necessary steps that can be taken moving forward.
The crash in the crypto market seems to have caused a domino effect on all other crypto platforms. Crypto enthusiasts continue to hope that the recent slump in the market will turn around and the value of crypto will reach the heights they once were at a few years ago.
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