The crypto industry has experienced many challenges in 2022, including volatile Bitcoin prices and the collapse of major exchanges. Despite some positive developments like the launch of Ethereum 2.0 and the growth of DeFi, there have also been numerous failures. The following is a list of ten of this year’s most significant crypto failures.
StableFund
StableFund is shutting down due to a combination of market conditions and personal threats against the team. The company has faced challenges and has struggled to maintain viability, and the team has faced harassment and threats that have made it difficult for them to continue operating. As a result, the company has made the difficult decision to close down, and will be providing refunds to investors through a special landing page.
May 2022 Crash
It was widely anticipated that the Crypto 2022 crash in May was going to happen at some point. The crypto industry had been relying on a large amount of liquidity that was eventually going to run out. When that happened, it had significant consequences.
Investment Monitor
The value of Bitcoin and other major cryptocurrencies saw a significant drop after a period of growth. The main factor contributing to the crash was the decision by the U.S. Federal Reserve to increase interest rates. This led to a large number of traditional and crypto market investors selling off their assets out of fear.
The selling was rapid and severe, resulting in billions of dollars of value being lost in a short amount of time.
Three Arrows Capital (3AC) founders on the run
Three Arrows Capital (3AC), a prominent and well-established cryptocurrency hedge fund, unexpectedly announced that it was shutting down and would be selling all of its crypto 2022 assets. The company owed a large sum of approximately $3.5 billion to 27 firms, including digital broker Voyager. 3AC’s collapse was caused by the failure of the cryptocurrencies LUNA and UST in May.
CryptoPotato
3AC, which was based in Singapore, was founded in 2012 by Kyle Davies and Su Zhu and was one of the first major institutional investors in the cryptocurrency market. It quickly gained a reputation as a significant player in the industry.
However, the founders of the company have been accused of fraud and mismanagement, leading to the company filing for Chapter 15 bankruptcy on July 1.
Also Read: Top 5 Crypto Exchange Companies that Faced Downfall in 2022!!
Liquidation of Voyager Digital
In July, Voyager Digital, a crypto lending company, filed for bankruptcy in the United States after 3AC defaulted on a loan of $665 million from Voyager. Despite reaching an agreement in September to sell its assets for $1.4 billion in cryptocurrency to FTX, the deal fell through due to FTX’s own problems.
Binance.US, one of the largest cryptocurrency exchanges in the world, entered into an agreement to acquire the assets of Voyager and made a $10 million deposit, as well as agreeing to reimburse Voyager for certain expenses up to a maximum of $15 million.
Celsius Network closing its doors
Celsius, once a popular cryptocurrency lending platform, filed for bankruptcy after a series of issues forced it to shut down. The company faced significant financial problems and was unable to fulfill customer withdrawal requests, and was reportedly investing customer deposits in high-risk ventures. It has also been accused of mistreating customers, violating customer privacy, and spending excessively on a new bitcoin mining operation.
The company began experiencing difficulties in June 2022 when it abruptly halted all withdrawals, preventing users from moving their funds to other platforms. It then filed for bankruptcy in mid-2022 after laying off over 20% of its workforce.
Meanwhile, it is attempting to recover $7.7 million from the estate of rival Voyager Digital.
Also Read: Crypto Lender Vauld Rejected Nexo’s Offer Over Potential Procurement!!
FTX Crashed and Burned
In late 2022 session, the collapse of FTX was one of the most dramatic in the cryptocurrency industry. The company, founded and led by CEO Sam Bankman-Fried, was a popular exchange with over a million users and a valuation of $32 billion at the start of the year.
There were allegations that Bankman-Fried directed customer deposits to FTX’s affiliated trading firm Alameda Research, leading to withdrawals of around $6 billion from investors within 72 hours.
In November, the company filed for bankruptcy just one week after its attempted merger with rival cryptocurrency exchange Binance fell through. Bankman-Fried and several celebrities who endorsed FTX are also facing a class-action lawsuit in Florida.
BlockFi bankruptcy
The Block
According to PitchBook, BlockFi, a cryptocurrency lender last valued at $4.8 billion, filed for Chapter 11 bankruptcy after FTX’s collapse. The company relied on a $400 million credit facility from FTX to stay afloat and listed more than 100,000 creditors with liabilities and assets ranging from $1 billion to $10 billion.
Hodlnaut probed for cheating and fraud
Hodlnaut, a Singapore-based cryptocurrency lending and borrowing platform, has been heavily impacted by the fallout from the Terra crisis. The company suspended withdrawals, swaps, and deposits and also withdrew its application for a license from the Monetary Authority of Singapore (MAS) to provide digital token payment services.
In addition, the Commercial Affairs Department (CAD) has launched an investigation into the crypto lender for possible cheating and fraud. This is a further blow to the already struggling cryptocurrency industry.
Also Read: Cryptocurrency: Bitcoin and Ethereum Gain Mileage by 6%!!
Vauld mired in controversy
Vauld, an India-registered, Singapore-based company, has been embroiled in controversy. It has been accused of facilitating “crime-derived” proceeds from predatory lending firms and as a result, India’s anti-money laundering agency froze assets worth $46.4 million from Vauld’s local entity in August.
The company also suspended its customers from withdrawing, trading, and depositing on its platform last month and has recently filed for bankruptcy. It is reported to owe creditors $363 million.
Zipmex filed for bankruptcy protection
Zipmex is expected to be acquired by a venture capital firm for approximately $100 million as it filed for bankruptcy protection in Singapore, becoming the latest victim of the worldwide downturn in digital currencies. The company, which is backed by Jump Capital, had to halt withdrawals in July due to a liquidity crisis that has affected the industry.
It was working to address its exposure of $53 million to crypto lenders Babel Finance and Celsius at the time. The exchange resumed withdrawals a day later and in August, hired restructuring and financial consulting firm KordaMentha to oversee its payback plan.
What’s Next?
The cryptocurrency industry has experienced a lot of ups and downs in the past few years, including the bull market of 2017 and the bear market of 2018. While the industry has made significant progress in recent years, 2022 has been a particularly volatile year with regulatory issues and hacking scandals affecting the industry.
It’s difficult to predict what the future holds for crypto. However, one thing is certain: the world of cryptocurrency is always exciting and dynamic.