Crypto Bankruptcies In 2022

The cryptocurrency market had a tough year in 2022. In April last year, the global cryptocurrency industry, excluding Bitcoin, had a market cap of $1 trillion, according to CoinMarketCap. By June 19, it was worth $464.7 billion. Here are some of the most notable crypto bankruptcies of 2022.

following the crypto lender’s demise. On December 19, Binance agreed to acquire its assets for nearly $1 billion.

Celsius Network

Headquarters: U.S.

Founded in: 2017

Three Arrows Capital

Headquarters: Singapore

Founded in: 2012

On July 1, 2022, crypto hedge fund Three Arrows Capital sought protection from creditors in the U.S. under Chapter 15 of the U.S. Bankruptcy Code, which allows foreign debtors to shield U.S. assets. The firm was one of the most prominent crypto hedge funds, managing about $10 billion in assets in March 2022. News of the bankruptcy surfaced after the Singaporebased company defaulted on a $650 million loan provided by crypto broker Voyager Digital. Advisers in charge of liquidating the fund said in a July 8 filing that the company’s founders Su Zhu and Kyle Davies hadn’t cooperated with them and that the founders’ whereabouts were unknown.

The two allegedly refused to turn on their cameras and unmute their mics even when being addressed during a Zoom call. In a tweet on July 12, Zhu said that a “good faith” effort to work with the liquidators “was met with baiting.”

Voyager Digital Headquarters:

U.S.

Founded in: 2018

Digital asset brokerage Voyager Digital Ltd filed for Chapter 11 bankruptcy in the U.S. on July 6, 2022. On July 1, 2022, Voyager Digital LLC, the operating platform of Voyager Digital Ltd, said it was going to temporarily suspend trading, deposits, withdrawals, and loyalty awards. Voyager Digital LLC reached an agreement in September 2022 for FTX to acquire its assets for $1.4 billion, but it fell through

Crypto lender Celsius Network announced on July 13, 2022, that it had started the process of filing for Chapter 11 bankruptcy protection following a crash in digital currency prices and paused withdrawals, swaps, and transfers on its platform in June 2022. Following the bankruptcy filing, Celsius Network said it had filed a series of customary motions with the court to allow it to continue to operate normally, including requests to pay employees and continue their benefits. Reuters reported New Jersey, Texas, and Washington state securities regulators stepped in to investigate Celsius’ decision. On January 5, 2023, New York State sued the company’s founder and former CEO, Alex Mashinsky, for engaging “in a scheme to defraud hundreds of thousands of investors” by offering loan products promising yields of up to 17% with “minimal risk.”

FTX Headquarters:

in the U.S. after most of the FTX Group filed for Chapter 11 bankruptcy. In a filing with the U.S. Bankruptcy Court for the District of Delaware, newly appointed CEO and Chief Restructuring Officer John Ray said the Bahamasheadquartered FTX had suffered a “complete failure of corporate controls” and that the accuracy of the balance sheets of the firm was questionable.

Bankman-Fried was indicted by the U.S. Department of Justice on eight criminal charges, which include conspiracy to commit wire fraud, commodities fraud, securities fraud, money laundering, and, in parallel, actions the Commodity Futures Trading Commission and the Securities and Exchange Commission charges against him. The once billionaire was arrested in the Bahamas on December 12, 2022, and his trial will begin in October 2023. He has pleaded not guilty to the charges.

BlockFi Headquarters:

U.S.

Founded in: 2017

Bahamas

Founded in: 2019

FTX founder and former CEO Sam Bankman-Fried filed for Chapter 11 bankruptcy protection in the U.S. for FTX Group on November 11, 2022, as liquidity dried up, customers demanded withdrawals, and rival firm Binance backed out of its nonbinding agreement to buy the company. On November 15, FTX Digital Markets— the entity associated with Bankman-Fried’s global digital asset empire—filed for Chapter 15 bankruptcy

On November 14, 2022, digital asset lender BlockFi released a statement saying it “had significant exposure to FTX and associated corporate entities” that encompassed obligations owed to them by Alameda Research, assets held at FTX.com, and undrawn amounts from their credit line with FTX US. They asked clients not to submit any deposits to BlockFi wallet or interest accounts. BlockFi filed for Chapter 11 bankruptcy protection in a New Jersey court on November 28, 2022. The company revealed that $680 million of bad loans to the sister company of FTX, Alameda, were behind bankruptcy filing. The filing showed BlockFi has over 100,000 creditors.