Top 10 crypto busts of 2022

1. Terraform Labs

Primary business: It developed the Terra blockchain technology and was responsible for issuing the Luna and TerraUSD tokens (UST).

When: May 2022

What happened: The UST lost its peg after a series of large dumps of the token by “whales” – investors who held significant UST positions. Founder Do Kwon eventually launched a new blockchain known as “Terra 2.0”. Previous Luna and UST holders will receive the new blockchain’s native token, Luna 2.0, based on their holdings. 

Estimated impact: US$60 billion (combined value of Luna and UST tokens)

2. Three Arrows Capital (3AC)

Primary business: Cryptocurrency hedge fund

When: Jul 1

What happened: Following UST’s collapse, lenders began recalling their money. 3AC, which operated on a highly leveraged trading strategy, was unable to meet its margin calls. It filed for bankruptcy, citing contagion effects from UST’s collapse. At its peak, the fund reportedly managed US$10 billion worth of assets. Its founders Su Zhu and Kyle Davies have not spoken up about the matter publicly since the company went bust, though Su has seemingly resurfaced on Twitter and commented on recent crypto busts, including FTX.

Estimated impact: It owes creditors US$3 billion. 

3. Voyager Digital

Primary business: Cryptocurrency lending and trading house

When: Jul 6

What happened: The Wall Street Journal reported that the lender had loaned 3AC more than US$650 million. Voyager filed for bankruptcy, citing the lack of repayment from 3AC as the main reason for the company’s collapse. Crypto exchange Binance.US is now set to buy Voyager’s assets out of bankruptcy in a deal worth US$1.02 billion, a slight discount to the earlier deal with FTX at US$1.4 billion. It also owed US$75 million to Alameda Research and about US$960,000 to Google, according to a bankruptcy filing by the company. 

Estimated impact: The company said it owed about US$1.4 billion to roughly 100,000 creditors. 

4. Celsius Network

Primary business: Cryptocurrency lender

When: Jul 13

What happened: The company began freezing withdrawals, swaps and transfers in response to “extreme market conditions”, fuelling rumours that the platform had become deeply insolvent. It later filed for bankruptcy on Jul 13, citing the UST contagion as a reason for its collapse. 

Estimated impact: Court filings showed a US$1.2 billion hole in its balance sheet.

5. Vauld

Primary business: Cryptocurrency lender

When: Jul 8

What happened: On Jul 4, the company paused all withdrawals, trading and deposits on its platform, and said it was exploring potential restructuring options. Vauld said it was facing financial challenges due to “volatile market conditions’‘, which led to a mass withdrawal of funds by customers. The company filed the paperwork for protection from its Singaporean creditors on Jul 8. In its most recent update, the company said a potential acquisition by rival Nexo has been cancelled. It has until Jan 20 to work on a restructuring plan, though the company has hinted it may apply for yet another extension to buy time for restructuring.

Estimated impact: According to an affidavit on Jul 8, the company owed US$402 million to its creditors. 

6. Zipmex

Primary business: Cryptocurrency exchange

When: Jul 28

What happened: The company paused all trading and withdrawals on Jul 20 and thereafter filed for bankruptcy relief on Jul 28, citing “circumstances beyond our control, including volatile market conditions and the resulting financial difficulties of our key business partners”. Bloomberg reported early in December that the company was in advanced discussions with venture capital fund V Ventures over the sale of a majority stake in the business, though it is unclear whether the deal has gone through to date. 

Estimated impact: Zipmex is owed a net amount of US$48 million by Babel Finance, and another US$5 million by Celsius Network. It had burnt a US$53 million hole in its balance sheet due to its exposure to some of the industry’s troubled crypto lenders. 

7. Babel Finance

Primary business: Cryptocurrency lender

When: July

What happened: Babel Finance in June suspended customer withdrawals due to major fluctuations in the market and “conductive risk events’‘ among institutional market participants, it said on its website. Babel was last reported trying to raise hundreds of millions of dollars in debt and equity investments, turning its largest creditors into shareholders. 

Estimated impact: Digital asset publication The Block reported that Babel Finance lost US$280 million in proprietary trades with customer funds. 

8. Hodlnaut

Primary business: Cryptocurrency lender and borrower

When: Aug 8 

What happened: The lender suspended withdrawals, swaps and deposits on Aug 8. The report by Hodlnaut’s managers also states that employees withdrew a total of $550,000 between the beginning of July and when withdrawals were halted.

Estimated impact: Its judicial manager estimated the company’s losses at US$189.7 million due to UST’s collapse. It also held S$18.4 million worth of assets on FTX.

9. FTX

Primary business: Cryptocurrency exchange, with a trading house business on the side

When: November

What happened: In early November, CoinDesk published an article raising concerns about FTX’s finances based on a leaked balance sheet. CZ, founder of Binance, announced a few days later on Twitter that he planned to sell US$530 million of FTX’s token — FTT, triggering a run. Investors sought to withdraw an estimated US$5 billion from FTX, causing a “liquidity crunch”. FTX and all its subsidiaries file for bankruptcy under Chapter 11 on Nov 11. It was revealed that founder Sam Bankman-Fried had used customer assets to fund its subsidiary business, Alameda Research, in trading. He also used the company’s funds for a number of personal purchases as well as to fund political campaigns. Bankman-Fried was arrested in the Bahamas on Dec 12.

Estimated impact: It owes at least US$3.1 billion to its largest creditors. The full extent of its losses has not yet been determined. 

10. BlockFi

Primary business: Cryptocurrency exchange and interest-bearing custodial service for cryptocurrencies

When: Nov 28

What happened: Shortly after FTX’s collapse, the company said it would file for bankruptcy, citing “significant exposure” to FTX and Alameda Research. The company listed an outstanding US$275 million loan to FTX US. 

Estimated impact: The company has more than 100,000 creditors, with liabilities and assets ranging from US$1 billion to US$10 billion.