Many crypto coins are up and scaling high in value. Bitcoin, the primary online casino cryptocurrency, has crossed 50k in value, Ethereum is close to 3k, and BNB is up. What a good time for crypto enthusiasts! However, amidst the bull run of these coins, the volatile nature of crypto should not be forgotten if you are a crypto holder. Over the years, we have seen the sudden collapse of crypto companies, affecting investors and users at crucial times. To date, most of the firms and exchange platforms are still facing financial distress and insolvency. This cryptocurrency news will update you on Crypto bankruptcies.
The Major Cause of Crypto Bankruptcies
Various complex technical issues caused crypto bankruptcies, but TerraUSD and FTX’s collapse were the foundation of the problem. Crypto businesses often interlink with each other. Therefore, the fall of one can significantly affect the other, especially when they depend on one another for investments and loans.
For example, BlockFi crashed after FTX filed for bankruptcy and became incapacitated because the company had $355 million of assets at FTX. Voyager, Three Arrows, and Celsius filed for bankruptcy after the downfall of TerraUSD and its crypto coin, Luna.
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Top 3 Crypto Bankruptcies that Shook the Digital Market
The crypto bankruptcies below include crypto exchanges and blockchain companies. Several of them filed for Chapter 11 of the American Business Law section, but it was mostly too late to stop the free fall. And because cryptocurrency is not insured by the Federal Deposit Insurance Corp (FDIC), investors and users lose their money and assets.
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Genesis Global Capital Bankruptcy, 2023
Genesis, founded in 2013, was one of the largest lenders in the crypto industry. The company froze its users’ redemptions on November 16th, 2022, and then filed for bankruptcy on January 20th, 2023.
The primary cause of the company’s downfall was the loans it gave to 3AC and Alameda Research, a crypto trading firm, both of which went insolvent in July 2022. In addition, Genesis had some deals with FTX. As soon as FTX crashed, the company fell further, losing over $175 million worth of assets.
On Valentine’s Day, February 14th, 2024, a U.S. court permitted the crypto lender to sell its Grayscale cryptocurrency trust shares worth about $16 billion to repay creditors.
Genesis plans to liquidate, shut down operations, and replay customers. Users of online casino cryptocurrency should expect to be refunded.
Three Arrows Capital (3AC) Bankruptcy, 2022
Three Arrows Capital was the first company to go bankrupt in 2022 after Luna and the stablecoin TeraUSD collapsed. After the collapse of the two coins, many investors began to withdraw their assets from different brokerages and exchanges. Meanwhile, 3AC has a solid link to Terra Luna. It had invested about $500 million into the project. As a result, the crypto head fund company with approximately $ 10 billion in crypto assets ran into debts. Bitcoin and Ethereum prices also crashed, leaving the company with no choice but to file for bankruptcy, which it did in July 2022.
FTX Bankruptcy, 2022
FTX was once the second-largest cryptocurrency exchange platform by trade volume. In November 2022, it filed for Chapter 11 bankruptcy in the United States. The company’s turmoil began when investors discovered that Alameda Research had a total debt of about $8 billion, and its equity is in FTT. FTT was the native token of FTX.
Binance, currently the largest crypto exchange company by trade Volume, sold off its FTT assets after learning of the Alameda crisis. Seeing what Binance did, users of FTX panicked and decided to withdraw their assets worth about $6 billion, all within 72 hours.
As expected, FTX could not price the withdrawals. Then, it became clear that the company had channeled its funds to Alameda for trading bets, which the firm lost most of. To date, FTX owes its customers and creditors and has a debit of $9 billion.
Crypto Bankruptcies Final Thoughts
Since the beginning of this year, there have been incidents of a few crypto scams, but there is no forecast of any company going bankrupt soon. The crypto market is doing well now and gaining ground worldwide. Therefore, every exchange and company trends carefully, taking lessons from the top three crypto bankruptcies.
As a casino player engaging in Bitcoin betting, ensure you play at a trusted platform that won’t go bankrupt. Test your casino games in the demo version before putting in your money, so you’re sure how to play them
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