These Crypto Firms Have Run Into Hardships And Trouble After Meltdown

Crypto firms, which boomed during the COVID-19 pandemic, have run into difficulties recently due to a slump brought on by the downfall of a major token in May and a global risk-off sentiment.

Below are some of the firms that have run into trouble recently:

Terraform Labs

The South Korea-based company, which is behind the dollar-pegged stablecoin TerraUSD and its paired token Luna, plunged in value in May, sparking sell-offs and igniting a chain reaction.

The company's co-founder, Do Kwon, announced in May a "recovery plan", with additional outside funding and rebuilding of TerraUSD so that it is backed by reserves rather than relying on an algorithm to maintain its 1:1 dollar peg.

An official at South Korea's Supreme Prosecutors' Office said on June 21 that several employees of Terraform had been put on a no-fly list and cannot leave the country.

Voyager Digital

The US-based crypto lender said on July 6 it had filed for bankruptcy.

In its Chapter 11 bankruptcy filing, Voyager estimated that it had more than 100,000 creditors and somewhere between $1 billion and $10 billion in assets, and liabilities worth the same value.

Three Arrows Capital (3AC)

The Singapore-based crypto hedge fund sought protection from creditors under Chapter 15 of the U.S. bankruptcy code, which allows foreign debtors to shield U.S. assets, according to a court filing on July 1.

Liquidators for 3AC obtained U.S. court permission on July 12 to issue subpoenas and lay claim to its assets, noting that 3AC's missing-in-action founders no longer control its accounts.

Celsius Network

New Jersey-based Celsius said on July 13 it had filed for bankruptcy. It listed estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion, according to a court filing.

A day earlier, Vermont's Department of Financial Regulation (DFR) had said it believed Celsius was "deeply insolvent" and did not have the assets and liquidity to honour its obligations to customers and other creditors.

Vauld

The Singapore-based company said on July 4 it had suspended withdrawals for its more than 800,000 customers. In a blog post, Vauld said it was facing "financial challenges" due to volatile market conditions.

"The financial difficulties of our key business partners inevitably affecting us," the company said, adding that customers had withdrawn around $200 million since June 12.

Babel Finance

The Hong Kong-based crypto lender said it had temporarily suspend withdrawals and redemption of crypto assets on June 17, as the company scrambles to pay its clients.

"Due to the current situation, Babel Finance is facing unusual liquidity pressures," the company said, highlighting high volatility of the digital currency market.

Coinbase Global Inc

The cryptocurrency exchange said on June 14 it would cut about 1,100 jobs, or 18 per cent of its workforce.

"We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period," CEO Brian Armstrong said in a blogpost.