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Expert Opinion On Crypto Bankruptcies

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Jan 11, 2023
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3 min read
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This blog post will cover:

  • Three Arrows Capital
  • Celsius
  • Voyager Digital
  • Riot Blockchain Inc. и TeraWulf Inc.
  • Experts about the causes and consequences of these events

This crypto winter is not an easy one for many of us. Let's remember a few high-profile cases of crypto bankruptcies that have happened recently.

Three Arrows Capital

Amid a sharp decline in the value of cryptocurrencies, Singapore’s crypto hedge fund, Three Arrows Capital, suffered serious losses. On June 29, the company was declared bankrupt and liquidated. The bankruptcy decision was the start of the asset recovery process, but the company brought a case before the US court as a foreign brand to protect from creditors, citing Chapter 15 of the US Bankruptcy Code.

Celsius

On June 13, the largest crypto bank blocked the possibility of transferring and withdrawing funds from the platform amid “extreme market conditions”.

On July 14, the Celsius Network filed for bankruptcy to the US Bankruptcy Court of the New York Southern District. The company estimates its assets and liabilities to more than 100 thousand creditors to $10 bln. The company currently has $167 mln in stock.

Voyager Digital

On July 5, a Toronto-based crypto broker sent an application to the US Bankruptcy Court of the New York Southern District to plead insolvency under Chapter 11 of the US Bankruptcy Code. Voyager used the judicial protection of assets. Creditors will not be able to sue the company for the money they are owed during the bankruptcy process. Voyager has suffered giant losses as a result of its participation in the previously bankrupt hedge fund — Three Arrows Capital. The company stated that it continues seeking a refund from Three Arrows Capital within court proceedings in the British Virgin Islands and New York.

Riot Blockchain Inc. и TeraWulf Inc.

North American mining companies are forced to sell 100% of their coins amid the Bitcoin price decrease. This measure led to forced sales of Bitcoin held in reserves. Since the beginning of 2022 shares of companies have lost more than 80% of their value. Canadian competitors are also losing more than 70%. According to experts, the further sale of reserves will put serious pressure on the cost of Bitcoin.

Experts about the causes and consequences of these events

Easy-to-borrow loans and high deposit rates attracted large amounts of capital to the cryptocurrency market during the 2020 pandemic. The euphoria started amidst the US Federal Reserve’s loose monetary policy.

Today, due to the tightening of monetary policy and the serious fall of cryptocurrencies, crypto companies are unable to fulfill their obligations to users and are forced to become bankrupt. The collapse of Terra became a powerful push for the current events.

Thank you for being with us, SimpleSwap will continue to keep you updated. Let's wait together for spring to come to the Crypto World.

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