- Published: 25 July 2022 25 July 2022
- Hits: 249 249
The price of bitcoin has once again fallen below $22,000 once more. As expected, it has come with its own consequences for those in the crypto market. Most prominent have been in the liquidations, which have ballooned in the last 24 hours. With the most recent crash, more than 57,000 traders have seen their positions liquidated.
Bitcoin Dip Triggers $151 Million Liquidations
Over the last 24 hours, more than 57,000 traders have been liquidated in the crypto market. This has led to a total of $151 million in assets liquidated over the last day. The most prominent of these has been the Ethereum liquidations.
Ethereum, which had taken the lead during the market recovery and rallied higher than $1,600, had led the short liquidations and now, continues to lead in terms of long liquidations. Ethereum liquidations alone have crossed $70 million in the last 24 hours and $20 million in the last 12 hours.
Others include bitcoin, which has only seen half the volume of liquidations compared to Ethereum. In total, there have been more than $30 million in bitcoin liquidations in the past day, accounting for 1.38K BTC. This makes it the second-largest liquidation for a digital asset in the last day. The majority of liquidations have been from long traders at 63.96%.
BTC price falls below $22,000 | Source: BTCUSD on TradingView.com FOMC Looms Over Market
The recovery that had been rocking bitcoin and other cryptocurrencies has been stopped dead in its tracks as the week opened. There are various factors behind this decline such as large corporations announcing earnings and showing that they had dumped a lot of bitcoin.
Additionally, the FOMC is starting on Tuesday, and the announcement is expected to be made on Wednesday. So basically, while this is turning out to be a big week for the financial market, it doesn’t necessarily mean that the market would see any good price action.
Read full article here:
#BreakingNews #Celsius From $25 billion to $167 million: How a major crypto lender collapsed and dragged many investors down with it
- Published: 24 July 2022 24 July 2022
- Hits: 366 366
- Celsius is down to $167 million “in cash on hand,” which they say will provide “ample liquidity” to support operations during the restructuring process.
- Celsius owes its users around $4.7 billion, according to its bankruptcy filing — and there’s an approximate $1.2 billion hole in its balance sheet.
Celsius filing for bankruptcy this week surprised virtually no one. Once a platform freezes customer assets, it’s typically all over. But even though it was expected, it remains a really big deal for the industry.
In October 2021, CEO Alex Mashinsky said the crypto lender had $25 billion in assets under management. Even as recently as May — despite crashing cryptocurrency prices — the lender was managing about $11.8 billion in assets, according to its website. The firm had another $8 billion in client loans, making it one of the world’s biggest names in crypto lending.
Now, Celsius is down to $167 million “in cash on hand,” which it says will provide “ample liquidity” to support operations during the restructuring process.
Meanwhile, Celsius owes its users around $4.7 billion, according to its bankruptcy filing — and there’s an approximate $1.2 billion hole in its balance sheet.
It goes to show that leverage is one hell of a drug, but the moment you suck out all that liquidity, it’s a whole lot harder to keep the party going.
The fall of Celsius marks the third major bankruptcy in the crypto ecosystem in two weeks, and it is being billed as crypto’s Lehman Brothers moment — comparing the contagion effect of a failed crypto lender to the fall of a major Wall Street bank that ultimately foretold the 2008 mortgage debt and financial crisis.
Regardless of whether the Celsius implosion portends a larger collapse of the greater crypto ecosystem, the days of customers collecting double-digit annual returns are over. For Celsius, promising those big yields as a means to onboard new users is a big part of what led to its ultimate downfall.
“They were subsidizing it and taking losses to get clients in the door,” said Castle Island Venture’s Nic Carter. “The yields on the other end were fake and subsidized. Basically, they were pulling through returns from [Ponzi schemes].”
Who will get their money back
Three weeks after Celsius halted all withdrawals due to “extreme market conditions” — and a few days before the crypto lender ultimately filed for bankruptcy protection — the platform was still advertising in big bold text on its website annual returns of nearly 19%, which paid out weekly.
“Transfer your crypto to Celsius and you could be earning up to 18.63% APY in minutes,” read the website on July 3.
Promises such as these helped to rapidly lure in new users. Celsius said it had 1.7 million customers, as of June.
The company’s bankruptcy filing shows that Celsius also has more than 100,000 creditors, some of whom lent the platform cash without any collateral to back up the arrangement. The list of its top 50 unsecured creditors, includes Sam Bankman-Fried’s trading firm Alameda Research, as well as an investment firm based in the Cayman Islands.
Those creditors are likely first in line to get their money back, should there be anything for the taking — with mom and pop investors left holding the bag.
After filing its bankruptcy petition, Celsius clarified that “most account activity will be paused until further notice” and that it was “not requesting authority to allow customer withdrawals at this time.”
The FAQ goes on to say that reward accruals are also halted through the Chapter 11 bankruptcy process, and customers will not be receiving reward distributions at this time.
That means customers trying to access their crypto cash are out of luck for now. It is also unclear whether bankruptcy proceedings will ultimately enable customers to ever recoup their losses. If there is some sort of payout at the end of what could be a multi-year process, there is also the question of who would be first in line to get it.
Unlike the traditional banking system, which typically insures customer deposits, there aren’t formal consumer protections in place to safeguard user funds when things go wrong.
Celsius spells out in its terms and conditions that any digital asset transferred to the platform constitutes a loan from the user to Celsius. Because there was no collateral put up by Celsius, customer funds were essentially just unsecured loans to the platform.
Also in the fine print of Celsius’ terms and conditions is a warning that in the event of bankruptcy, “any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable” and that customers “may not have any legal remedies or rights in connection with Celsius’ obligations.” The disclosure reads like an attempt at blanket immunity from legal wrongdoing, should things ever go south.
Another popular lending platform catering to retail investors with high-yield offerings is Voyager Digital, which has 3.5 million customers and recently filed for bankruptcy, as well.
To reassure their millions of users, Voyager CEO Stephen Ehrlich tweeted that after the company goes through bankruptcy proceedings, users with crypto in their account would potentially be eligible for a sort of grab bag of stuff, including a combination of the crypto in their account, common shares in the reorganized Voyager, Voyager tokens, and then whatever proceeds they are able to get from the company’s now-defunct loan to the once prominent crypto hedge fund Three Arrows Capital.
It is unclear what the Voyager token would actually be worth, or whether any of this will come together in the end.
Three Arrows Capital is the third major crypto player seeking bankruptcy protection in a U.S. federal courtroom, in a trend that can’t help beg the question: Will bankruptcy court ultimately be the place where new precedent in the crypto sector is set, in a sort of regulate-by-ruling model?
Lawmakers on Capitol Hill are already looking to establish more ground rules.
Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., are aiming to provide clarity with a bill that lays out a comprehensive framework for regulating the crypto industry and divvies up oversight among regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission.
What went wrong
Celsius’ overarching problem is that the nearly 20% APY it was offering to customers wasn’t real.
In one lawsuit, Celsius is being accused of operating a Ponzi scheme, in which it paid early depositors with the money it got from new users.
Celsius also invested its funds in other platforms offering similarly sky-high returns, in order to keep its business model afloat.
A report from The Block found that Celsius had at least half a billion dollars invested in Anchor, which was the flagship lending platform of the now failed U.S. dollar-pegged stablecoin project terraUSD (UST). Anchor promised investors a 20% annual percentage yield on their UST holdings — a rate many analysts said was unsustainable.
Celsius was one of multiple platforms to park its cash with Anchor, which is a big part of why the cascade of major failures was so significant and swift after the UST project imploded in May.
“They always have to source yield, so they move the assets around into risky instruments that are impossible to hedge,” said Nik Bhatia, founder of The Bitcoin Layer and adjunct professor of finance at the University of Southern California.
As for the $1.2 billion gap in its balance sheet, Bhatia chalks it up to poor risk models and the fact that collateral was sold out from under it by institutional lenders.
Read full article here: https://www.cnbc.com/2022/07/17/how-the-fall-of-celsius-dragged-down-crypto-investors.html
- Published: 23 July 2022 23 July 2022
- Hits: 704 704
The beleaguered duo discussed how one of the most successful
crypto funds went from being a prominent trading desk to
owing creditors $2.8 billion.
The founders of insolvent crypto hedge fund Three Arrows Capital, Su Zhu and Kyle Davies, have broken their silence in an interview with Bloomberg.
The duo described the collapse as "regrettable," but denied claims they pulled money from the fund before its collapse, according to the report.
The collapse of Three Arrows, also known as 3AC, was seemingly triggered by the fall of the Terra ecosystem and sent ripples in the crypto market. Investors are claiming the defunct fund still owes them $2.8 billion. On Monday, a 1,157-page court filing revealed the extent of the hedge fund's debt following the implosion, with individual claims worth over $1 billion.
The founders declined to say where they were, but one of the lawyers on the call said their ultimate destination is the United Arab Emirates (UAE), the report added.
“Given that we had planned to move the business to Dubai, we have to go there soon to assess whether we move there as originally planned or if the future holds something different for us,” Zhu added.
In the report, Zhu said the reason for the fund's collapse was placing leveraged trades with hope that the crypto market would rebound to the upside. He compared 3AC's implosion to that of Celsius Network, a crypto lending firm that froze withdrawals and filed for bankruptcy protection after it failed to keep enough liquidity to honor customer redemptions.
One of 3AC's largest positions that went sour was in the Terra ecosystem and its token LUNA, which effectively collapsed to zero in May. The pair insists they are cooperating with authorities while trying to keep a low profile.
“For Kyle and I, there’s so many crazy people in crypto that kind of made death threats or all this kind of noise,” Zhu said. “We feel that it’s just the interest for everyone if we can be physically secured and keep a low profile.”
Three Arrows Capital did not immediately respond to CoinDesk's request for a comment.
Read Full Article Here: https://www.coindesk.com/business/2022/07/22/three-arrows-capital-founders-break-their-silence-look-to-move-to-dubai-report/
- Published: 23 July 2022 23 July 2022
- Hits: 287 287
Readers, Checkout the price action in
Ether Micro Jul '22 (TAN22)
at $1,000 and then the huge +pump
to $1,650ish. Is this a bear market
rally in Ethereum? Ether Micro was off the
most of the futures markets, June of 2022.
What a reversal in such! Here is a link for your