In this article, we will be taking a look at 10 crypto companies hit by the recent crash.
An undeniable global recession has resulted in the market facing a seemingly never-ending downturn, with the cryptocurrency market being no exception to this rule. During the recession, major crypto companies were brought to their knees during a $2 trillion crash in the crypto markets. Major companies like Three Arrows Capital and Celsius Networks have ended up filing for bankruptcy in 2022 in the wake of the crypto winter.
Ever since the arrival of cryptocurrencies in the market, major names in the big tech and payments sectors such as Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and PayPal Holdings, Inc. (NASDAQ:PYPL), among others, demonstrated an interest in investing in crypto platforms. Alongside such prominent companies, hedge funds and individual investors too began investing in the crypto market. Yet the recent crypto winter has plunged the market into an unprecedented downfall, with even prominent names such as Bitcoin falling 70% as of this July, according to CNBC. Such a crash is not the first occurrence for the crypto market, which suffered a similar event in 2017. The 2022 crash differs from the previous one because it is caused by macroeconomic factors like rising inflation, unlike the 2017 crash.
The 2022 crash has been spreading from one company to another since crypto companies rely on loans from each other. Three Arrows Capital (3AC), one of the major companies hit by the crash, first defaulted on a loan of over $600 million from Voyager Digital (TSE:VOYG). When 3AC went bankrupt, it led Voyager Digital (TSE:VOYG) into bankruptcy as well, since the latter in turn owed $75 million to Alameda Research. Alameda itself owed Voyager Digital (TSE:VOYG) $377 million, complicating matters further. The crash has led to the crypto market’s worst performance on record, as it has fallen by 60% to about $920 billion in 2022, according to CoinGecko.
The interconnected bad debt resulted in a major crash in the crypto markets, which has impacted nearly every crypto company. Coinbase Global, another major crypto name, is no exception, as it suffered a huge decline in user activity on its platform in the first quarter. Monthly transacting users fell by over 2 million in the first quarter of 2022 as compared to the quarter earlier, while trading volume fell by 44% over the same time, according to the Wall Street Journal.
Photo by Adam Nowakowski on Unsplash
Let’s now take a look at the 10 crypto companies hit by the recent crash.
Our Methodology
For our list below, we have selected cryptocurrency companies that are among the worst hit by the recent crypto winter. These companies have all undergone major changes as a direct result of the recent $2 trillion crypto crash that triggered massive layoffs, withdrawals, and bankruptcies. Each of the companies below has either filed for bankruptcy, resorted to employee layoffs, halted withdrawals and deposits, or ceased operations in the US entirely because of the volatile crypto market conditions.
Crypto Companies Hit By The Recent Crash
10. Vauld
Vauld is a Singapore-based cryptocurrency company offering crypto lending and investment services to over 800,000 clients. The company operates in India and aims to simplify the experience of earning, trading, and banking with cryptocurrencies.
On July 4th, the company announced that it had halted withdrawals and deposits for all clients, signifying that it is among the many crypto companies hit by the recent crash. The CEO of Vauld, Darshan Bathija, commented in light of this move that the unreliable and unstable market conditions had resulted in the company facing financial challenges. It was also noted that before this move, investors in the company had withdrawn over $197 million in the preceding months.
The company had operated strongly for about four years and raised $27 million through investors like Coinbase Ventures. Vauld now blames bearish sentiment, stemming from the collapse of Terraform’s UST stablecoin, alongside the pausing of withdrawals by other platforms, for its customers withdrawing $197.7 million since June 12th. While the company has managed to avoid bankruptcy, for now, it is still plagued by various financial difficulties because of the financial crunch.
While major companies like Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and PayPal Holdings, Inc. (NASDAQ:PYPL) continue to demonstrate an interest in crypto ventures, the fallout from the recent crash cannot be ignored.
9. Voyager Digital (TSE:VOYG)
Voyager Digital (TSE:VOYG) is an American cryptocurrency lender operating primarily in the US and Canada. The company operates a digital platform allowing its users to buy and sell cryptocurrency assets across multiple centralized marketplaces in one account.
On July 6th, Voyager Digital (TSE:VOYG) disclosed that it had filed for Chapter 11 bankruptcy. This announcement came just days after the company froze customer funds and suspended trading. By this time, Voyager Digital (TSE:VOYG) had already lost over $650 million on a loan to Three Arrows Capital, another failed crypto investor. These financial troubles prove that Voyager Digital (TSE:VOYG) was one of the many distressed companies during the crypto winter.
Despite a rescue loan offered to the company in June, courtesy of Alameda Research, a trading firm controlled by FTX founder Sam Bankman-Fried, Voyager Digital (TSE:VOYG) could not avoid filing for bankruptcy. The company also stated in its Chapter 11 bankruptcy petition that it had over 100,000 creditors by this point, alongside liabilities in the range of $1 billion to $10 billion.
Voyager Digital (TSE:VOYG) has stated that it currently hopes to pay back its customers with the crypto assets it still holds, alongside proceeds from Three Arrows Capital’s bankruptcy, company shares after its insolvency is resolved, and “Voyager tokens.” Currently, the company holds $110 million in cash and $1.3 billion in crypto assets on its platform.
8. Terraform Labs
Terraform Labs is the cryptocurrency company that is responsible for developing the Terra blockchain network and Anchor. It is based in Lake Country, British Columbia.
The company created the stablecoin TerraUSD which de-pegged from the US Dollar. This resulted in the crash of Terra Luna, leading to a massive sell-off in the crypto market. The Luna token had once been a top cryptocurrency worth over $40 billion, but it lost its value because TerraUSD broke its dollar peg.
The co-founder of Terraform Labs, Do Kwon, commented to the Wall Street Journal that the crash resulted in a loss of almost his whole net worth. It also led to thousands of global investors losing their savings and triggered the market-wide crypto winter plaguing many other companies today. Just like several other companies, Terraform Labs is another name that could not avoid the consequences of the recent crypto crash.
The company has attempted to stage a comeback despite its financial difficulties, launching a new Luna coin in May. The new coin was distributed for free to holders of the original Luna token. However, the results of this launch are yet to impress investors, as the Luna 2.0 also slumped to $1.97 from an $18.8 high in June, according to CoinGecko.
Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and PayPal Holdings, Inc. (NASDAQ:PYPL) are among the list of big tech companies that have funded crypto startups, although the recent crypto winter may discourage investments.
7. Three Arrows Capital (3AC)
Three Arrows Capital is a Singapore-based crypto hedge fund. The company announced its bankruptcy on June 29th, two days after receiving a notice of default on a loan from Voyager Digital (TSE:VOYG). It was founded in 2012 by Kyle Davies and Su Zhu.
Until March 2022, Three Arrows Capital managed $10 billion in assets, resulting in its reputation as being among the most prominent cryptocurrency companies across the globe. However, the recent downfall in crypto prices has resulted in Three Arrows Capital’s bankruptcy. The company defaulted on a $650 million loan repayment to Voyager Digital (TSE:VOYG) this June, signifying its financial troubles and plunging itself alongside other companies into the crypto crash.
Three Arrows Capital has filed for protection from its creditors under Chapter 15 of the US bankruptcy code as of this July. Its $200 million investment in the Luna token is one of the main reasons for its bankruptcy, as the investment bore no fruit in light of the stablecoin’s collapse.
The company’s financial troubles were also caused by risky investments such as overleveraged bets on Grayscale Bitcoin Trust. Three Arrows Capital has since been ordered by a British Virgin Islands court to liquidate its assets, after deeming the fund insolvent.
6. Celsius Network
Celsius Network is an American-Israeli crypto company. The company had been a global leader among crypto lending platforms. However, it halted transactions and withdrawals across its network this June.
Celsius Network held onto about $12 billion in user assets by halting all transactions and withdrawals. The withdrawal ban came after cryptocurrencies such as Bitcoin, Ether, and even Celsius Network’s own coin, CEL, plunged. CEL dropped by 20% on Friday, June 10th, and by an additional 67% over the weekend, signifying the deep financial distress Celsius Network was plunged into due to the recent crypto crash.
Celsius Network filed for Chapter 11 bankruptcy on July 13th. The company also laid off about a quarter of its workers on July 4th. Alongside this, the company has announced that it is exploring restructuring options.
Like Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), and PayPal Holdings, Inc. (NASDAQ:PYPL), many other companies have supported crypto companies in the past, yet the recent crash may halt support temporarily.
5. CoinFLEX
CoinFLEX was founded in 2019 as the world’s first physically delivered futures exchange. However, in light of the recent crypto winter, it temporarily halted all withdrawals in June because of its financial troubles.
While CoinFLEX halted all withdrawals less than a month ago in June, it has since announced that it plans to reclaim $84 million in owed funds. It is also partially reopening user withdrawals capped at 10%, leaving the remaining 90% of user balances as locked funds that still cannot be withdrawn or traded. This situation highlights how CoinFLEX has only become one of the companies hit by the recent crypto winter.
The move to halt all user withdrawals came after a counterparty defaulted on a $47 million margin call. CoinFLEX’s shortfall has also been estimated to stand at $84 million.
4. Babel Finance
Babel Finance is a Hong-Kong Based cryptocurrency lender and financial service provider. The company offers professional cryptocurrency asset financial services to its customers. The company halted all user withdrawals in June.
After its announcement halting user withdrawals, Babel Finance disclosed that it was hit by unprecedented liquidity issues because of the volatile crypto market conditions. Since then, the company has reached an agreement with several counterparties to receive payments for some debts that may ease its liquidity issues.
However, the company has not yet allowed user withdrawals to be made again. Babel Finance is one of the many crypto companies that have been hard hit by the crypto winter, resulting in billions of dollars being made inaccessible to investors.
3. BlockFi
BlockFi is one of the world’s leading cryptocurrency companies, founded to provide credit services. The company offers consumer financing services and loans to crypto asset owners. It also provides risk management, financial technology, and digital financing solutions.
Having suffered a loss of $80 million due to bad debt from Three Arrows Capital, the company can now be called one of the crypto companies hit by the crypto market downturn. This June, BlockFi also made an announcement that the company would terminate 20% of its workforce.
The company could not avoid the fallout from Three Arrows Capital’s collapse, as it had suffered a huge loss from 3AC’s bad debt. BlockFi also announced that it would no longer accept Grayscale Bitcoin shares as collateral because of its exposure to Three Arrows Capital’s downfall, as the latter had once owned over 5% of the Grayscale Bitcoin Trust. FTX has since agreed to purchase the hard-hit BlockFi for $240 million.
2. Uprise
Uprise is a cryptocurrency company based in South Korea. It provides Heybit, a digital asset finance service alongside Iruda, a global ETF investment service.
Having lost $20 million on July 7th, the company has become one of the worst-hit companies in the current crypto winter. The $20 million figure that Uprise lost this July equated to over 99% of its asset worth. This loss was attributed to the company shorting the Terra Classic native token, LUNC. The company has since been liquidated after losing almost all of its customers’ assets.
Uprise also lost about $3 million of its own funds, adding up to the 99% loss in its assets. The company has suspended services because of its failed shorting operation.
1. Coingate
Coingate is a crypto company based in Vilnius, Lithuania. It provides customers with a platform to buy and sell a range of crypto assets with a single payment. The company has recently ceased all operations in the US due to the volatile market conditions.
By ceasing all US operations, Coingate became another victim of the recent crypto winter. The announcement for ceasing all US operations was made on July 14th. Coingate further advised all users to withdraw their funds before July 19th.
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Disclosure: None. 10 Crypto Companies Hit By The Recent Crash is originally published on Insider Monkey.
