Here are 10 crypto companies that have been hit hard by the crypto winter
Several months ago, the prices of algorithmic stablecoin UST and Luna came under suspicion. Nobody knew then, but that was the start of the crypto winter – a long and long-term bear market within the crypto ecosystem.
Speaking at the Point Zero Forum in Zurich last month, Ravi Menon, CEO of the Monetary Authority of Singapore (MAS), called the development crises a “bloodbath”, and many will agree – the big stories in the crypto space are all focused on it. spectacular destruction that has been inflicted on investors and companies.
It is not just companies that have speculated in cryptocurrencies and lost bets that have been hit. In fact, the entire ecosystem appears to be in free fall. So two months later, which unfortunate companies have fallen victim?
1. Terraform Labs
To say that the crypto winter began here would not be entirely wrong. Terraform Labs ‘tokens were the first to crash, and many companies that had bought into Terraform Labs’ tokens were hit hard by the crash.
The tokens in question were the Terra UST token, which was to maintain a value of 1 UST to $ 1 at all times. For its part, the entire supply of UST was to be completely secured by another symbol from Terraform Labs, called Luna.
But when the UST stick came under suspicion, mass sales of both tokens occurred, and the values of both tokens crashed to almost zero overnight.
Terraform Labs founder Do Kwon apologized to his followers, but it was too late. Most had lost significant amounts of money, and there were even a few reported cases of suicide in Korea and Taiwan.
While Terraform Labs has since launched a new Luna 2.0 token – completely separate from the now worthless Luna Classic token – the damage has been done. Everyone who had the old Luna pieces had suffered losses, and the new pieces did not match the values of the old pieces.
2. Celsius
Before the Luna crash, Celsius was among the giants in the DeFi world. It operated as a crypto borrower, and was known for having large holdings in Luna. When the price of Luna crashed, Celsius was within the blast radius.
Celsius had promised depositors up to 17 percent annual interest, and to achieve this, they put funds in the anchor protocol on Luna, which provided up to 20 percent interest.
So when the prices of Luna crashed, it brought Celsius with it. The platform was forced to stop withdrawals, and the next day debtors asked to replenish the security or be liquidated.
Business executives are currently struggling to keep the company afloat and avoid liquidation. To that end, the company has sold its assets in an attempt to release capital that it has provided as collateral.
The last of these repayments took place as late as July 14, when Celsius repaid around $ 50 million of the debt.
But even these measures have not been sufficient, and Celsius filed for bankruptcy this week.
Three Arrows Capital
Three Arrows Capital was founded by former Credit Suisse bankers Kyle Davies and Zhu Su, and was a cryptocurrency hedge fund based in Singapore.
The company apparently managed over $ 3 billion in assets before being ordered to liquidate late last month. MAS also later criticized the company for providing false information and for managing more capital than was allowed.
Founder Zhu Su is himself a billionaire, and has given an option to buy a Good Class Bungalow in Bukit Timah in December last year, even though it is now for sale.
The founders are said to have fled and are in hiding, and a federal judge in a bankruptcy court in New York has given joint liquidators Teneo the power to sue the founders.
Zhu Su, for his part, has revealed that the founders and their families received “threats of physical violence”. In a tweet, he expressed disappointment that the founders’ “good faith in cooperating with the liquidators was met with bait”.
The company was also known for having a significant amount of Luna tokens, and co-founder Kyle Davies had previously stated that the company had invested over $ 200 million in LUNA tokens, and this was hit hard when the price of LUNA collapsed in May.
4. Crypto.com
Crypto.com is one of the few companies that has received approval in principle from MAS for the coveted main payment institution license. The company serves more than 50 million customers and is said to be the world’s fastest growing global cryptocurrency platform.
However, the crypto-lending platform announced last month that it would reduce the number of employees by around 20 percent globally, a total of around 260 employees.
According to CEO Kris Marszalek, the decision was “difficult and necessary” to optimize for profitability and sustainable growth during a market downturn.
Recently, there have also been rumors that the company is slowing down withdrawals and running special deposit campaigns, presumably to raise new money and limit withdrawals, although Marszalek has denied that these rumors hold water.
“Our withdrawal policy is the same as it always was, we did not implement any new restrictions. We do not run any special deposit campaigns, and we make sure that all the regular ones we run are profitable, he tweeted.
5. Bybit
Cryptocurrency exchange Bybit was also not spared from the crypto bear market, and according to an internal email from Ben Zhou, co-founder and CEO of Bybit, the company plans to lay off up to 30 percent of the workforce.
In an internal email, Zhou admitted that operational efficiency has deteriorated despite the company’s growing size, and that internal efficiency was still the biggest problem within Bybit.
As such, the layoffs were intended to help the company by removing overlapping features and building smaller but more agile teams to improve the company’s efficiency. He called the move “one of the toughest decisions I’ve ever had to make in my life”.
The Dubai-based exchange requires more than five million users a month and a presence in 160 countries.
6. Vauld
Earlier this month, the Singapore-based cryptocurrency lending and trading platform Vauld announced that it would suspend withdrawals and trading and seek new investors.
In a blog post, Vauld CEO Darshan Bhatija explained that the company was facing “financial challenges” and that the company had seen significant amounts of customer withdrawals.
The company has also appointed legal and financial advisers, and expressed that they want to apply for a stay in any case against it in order to restructure.
Vauld has also been confirmed in talks with Nexo to discuss a potential acquisition of Nexo, and has promised existing customers that their deposits will continue to earn interest on their holdings.
In addition, Bhatija has also stated that if the acquisition does not go through, the company has a plan that includes “raising more venture capital, exploring alternatives to a complete acquisition, waiting for some of our invested capital to be returned, the opportunity to convert debt to equity, issue our own token and / or develop a payment plan related to future income ».
Bhatija has blamed the state Vauld is in for the exposure to TerraUST crash, as well as the fall in prices of important cryptocurrencies such as Bitcoin and Ethereum. The company has also stated that it has assets worth around 330 million dollars and debts of almost 400 million dollars.
7. Voyager
As a crypto-lending and trading platform, Voyager was also hit hard by the chain reaction that the Luna crash had started.
At the height, the platform required around 3.5 million users and $ 5.9 billion in assets.
However, Voyager provided significant unsecured loans to Three Arrows Capital, and when Three Arrows Capital defaulted on these loans, Voyager remained high and dry. The amounts that Voyager claimed were 15,250 Bitcoin, worth around 294 million USD, and 350 million USDC.
In response, Voyager was forced to freeze customer funds on July 1, and just a few days later, it filed for bankruptcy protection in New York.
Despite this, Voyager CEO Steve Erhlich stated that he has “a viable business and a plan for the future”, indicating that he still believes in the future of the company.
The company has also announced a restructuring plan that compensates users with Voyager equity and Voyager tokens, and promised that customers will have their say on how Voyager eventually reorganizes the company’s debt.
8. CoinFLEX
One week after Celsius froze user withdrawals, CoinFLEX followed suit, also citing “extreme market conditions” for the move.
The crypto exchange was apparently also under stress when one of its major counterparties also failed to repay debt. This counterpart was later exposed by CoinFLEX CEO Mark Lamb for being a prominent crypto investor known as Roger Ver, although Ver has denied the allegations.
According to CoinFLEX, Ver had an outstanding debt of $ 84 million, and the company has entered into legal proceedings to recover the amount.
However, CoinFLEX has performed better than any of the other exchanges. The company has since announced that withdrawals will be allowed again, with some restrictions, through a new ‘Locked Funds Plan’.
The company has also issued a symbol called Recovery Value USD, with an interest rate of 20 percent to hold the virtual currency.
9. Babel Finance
Babel was a Hong Kong-based cryptocurrency lending and trading service, boasting Sequoia Capital China and Dragonfly Capital as its investors. Their focus was on institutional customers, and Babel limited itself to trading Bitcoin, Ethereum and stablecoins.
The company had raised $ 80 million in a Series B funding round, valued at $ 2 billion, in May this year.
However, the onset of cryptocurrency winter and investor panic forced the company to suspend withdrawals and redemption of cryptocurrencies in June, when the company tried to pay customers.
Babel announced that it was taking steps to alleviate the company’s liquidity situation, including initiating communications with potential investors for liquidity support, although there has been no update so far.
During the crisis, the company’s employees left en masse, in a mixture of redundancies and voluntary redundancies. Among those who left the company were Yulong Liu, head of partnership at Babel for almost three years, and communications director Jacynth Wang.
Babel had also previously lost brand leader Yiwei Wang, who had left voluntarily in April.
10. Coin base
The cryptocurrency exchange Coinbase has announced plans to lay off 18 percent of the workforce, around 1,100 employees, in an attempt to cut costs. It had previously announced and later extended a suspension of employment, and revoked some employment offers.
Coinbase has also recently come under fire from customers who are unable to withdraw money from the stock exchange, even though the company has not announced that withdrawals have stopped.
Instead, Coinbase issued a statement stating that they are investigating the issue and that the company is in contact with their payment processing partner.
With the crypto winter creating chaos among investors and companies, it should come as no surprise that some of these big names have been close to collapse, even though some are more than others.
Only time will tell which companies will survive the storm, but if the infection that has gripped the crypto ecosystem continues to spread, the future of these companies and the wider ecosystem looks significantly bleak.
Selected image credit: Respective company logos
