Here’s the 2023 Update You Need on Crypto Bankruptcies
Key takeaways
- Crypto exchange Bittrex filed for bankruptcy three days ago
- It’s a worrying development after massive bankruptcies in the crypto industry last year including FTX, Genesis and Celsius
- The crypto market has otherwise been doing well in 2023, with Bitcoin and Ethereum rising
Crypto: the land of opportunity, crypto whales and meme coins. That’s when it’s all working well, at least. Recently it’s been dogged by bankruptcy, regulatory fines and straight-up fraud.
It’s enough to put any would-be crypto investor off. But the market is resilient and we’ve seen crypto begin to recover in 2023. Here’s the latest on crypto bankruptcies and the 2023 market.
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A bite-sized round-up of the crypto bankruptcies
We’ll start with the biggest bankruptcy in the sector: FTX, which collapsed in November 2022 after it was accused of fraudulent activity (to say the least). Its founder, former crypto darling Sam Bankman-Fried, is awaiting trial, while FTX has a $9 billion deficit to answer for.
But before that, several big crypto firms were taken out in the summer of 2022. Crypto lending platform Celsius was already on the brink, but the last straw was the Luna stablecoin collapse that caused $60 billion to be wiped out. Celsius filed for bankruptcy in June 2022, with court records revealing a $1.2 billion hole in its finances.
Crypto exchange Voyager Digital came soon after, pausing withdrawals in July and securing a loan from Alameda Research (yep, that one) before admitting defeat and filing for Chapter 11 bankruptcy. It owes $1.3 billion to 100,000 creditors.
Then at the start of this year, we saw crypto lender Genesis fail as it revealed its fates were closely tied to the also-collapsed Three Arrows Capital, which filed for bankruptcy in July 2022, FTX and Alameda Research. Genesis limped on for a few months more but threw in the towel in January 2023.
Things had been looking relatively okay until a few days ago when crypto exchange Bittrex filed for bankruptcy after the SEC sued it for advertising securities. It’s been a running theme of the SEC for several crypto companies in 2023.
How is the crypto market doing in 2023?
After the crypto winter and FTX fallout last year, things have been looking up for the crypto market in 2023. Bitcoin prices are hovering around the $27,500 mark after Binance halted transactions several times this week, but it had been approaching the $30,000 threshold. Ethereum prices are hovering at the $1,800 mark, having seen a 52% increase since the start of the year.
We could see the market crash again if more bankruptcies are on the cards, but with the U.S. economy looking up experts are pretty confident crypto can weather further storms this time.
The bottom line
Crypto had it rough in 2022. But this year it’s made somewhat of a comeback, buoyed by a dedicated fanbase of crypto investors. It’s still a volatile market that’s highly sensitive to macroeconomic fluctuations, so we’d recommend a diversified approach to anyone considering investing in crypto.
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