Here are 14 crypto companies we lost in 2022

It’s hard not to look back at 2022 as a year dominated by the crash of the UST algorithmic stablecoin and the string of insolvencies and bankruptcies that followed.
The $48 billion fall of UST and its partner token LUNA led to a string of bankruptcies by a half dozen of the top crypto lenders — and then the spectacular implosion of the second-largest global cryptocurrency exchange, FTX. While the first half of crypto winter saw the idea of Bitcoin as digital gold go up in smoke and a series of nine-figure DeFi project hacks, the second, fiercer half of the crypto winter began on May 8, with the bankruptcies that followed damaging the reputation of the industry as a whole just as it went mainstream.

In many ways, the bankruptcies have done much more damage to digital assets than the falling price of always-volatile Bitcoin, as it resurrected the idea of crypto as far too risky.

Wonderland – Terraform Labs – Babel Finance – Three Arrows Capital – Voyager Digital – CoinFLEX – Celsius Network – Vauld – Nuri – Hodlnaut – Compute North – Freeway – FTX Group – SALT – BlockFi

Wonderland

While it wasn’t technically a bankruptcy, the Wonderland DeFi project collapsed and was shut down by its founder after it was revealed that one of its leaders was an infamous fraudster and ex-convict, Michael Patryn.
Credit card fraud conviction aside, Patryn’s name was already mud as a co-founder of QuadrigaCX, a failed crypto exchange whose demise remains one of the strangest stories in crypto.
While Patryn had departed QuadrigaCX years earlier, Wonderland’s community — otherwise known as “Frog Nation” — exploded when he was unmasked on Twitter as “0xSifu.”
— its treasury manager. Things only worsened when Wonderland co-founder Daniele Sestagalli admitted that he knew of Patryn’s past but believed in second chances.
While 0xSifu/Patryn was overwhelmingly ousted in a community vote, another one asking if the project should be wound down and funds returned came out narrowly in favor of continuing, 55% to 45%.

Babel Finance

On May 25, Babel Finance raised $80 million at a $2 billion valuation. On June 17, the Hong Kong-based crypto lender halted withdrawals. According to reports, it lost more than $280 million — 8,000 BTC and 56,000 ETH — in the week when Bitcoin dropped.

Three Arrows Capital

Three Arrows Capital had $18 billion in assets under management at its height. It made big bets on DeFi projects, including the LUNA token used for the arbitrage system that maintained UST’s dollar peg. Unfortunately, the firm defaulted on a $650 million-plus loan from Voyager Digital (the next domino to fall). Crypto billionaires Zhu and Davies are said to be on the run from liquidators of their company, 3AC. Liquidators have warned that 3AC’s remaining assets could be “dissipated” as they are “comprised of cash and digital assets.”

Voyager Digital

Voyager Digital was caught out by the exceptionally high-interest rates it offered clients. It loaned $350 million in USDC and 15,250 BTC to 3AC — totaling more than $650 million. With a big hole and $1.3 billion in assets remaining, Voyager filed for bankruptcy. 97% of its 3.5 million customers had invested less than $10,000. One woman testified that the $1 million she’d saved over 24 years was stuck on the platform. Voyager’s plan to repay creditors with its tokens and shares in a reorganized firm fell flat.

CoinFLEX

CoinFLEX halted withdrawals on June 23, citing “extreme market conditions” and “uncertainty around a certain counterparty.” That counterparty was later identified as Roger Ver, an early Bitcoin investor nicknamed “Bitcoin Jesus” by CEO Mark Lamb. We have a written contract with him, obligating him to guarantee any negative equity personally. He has been in default of this agreement.

Celsius Network

The company suspended withdrawals from 1.7 million users’ accounts in June, leaving them locked out of their savings. One month later, the company emerged with a $1.2 billion black hole in its finances. Former employees have accused the firm of “sloppiness and mismanagement.” A 14,500-page document later emerged that revealed the transactions made by customers in granular detail. A bankruptcy judge has approved a $50 million payout for Celsius customers, but it’s just a fraction of what they’re owed. Customers are facing a long and uncertain path as they battle to be reunited with their funds. There are no guarantees that they’ll receive the total amount owed.

Vauld

Crypto lender trading platform Vauld has filed for bankruptcy. The company owes its clients about $360 million and another $35 million to a secured creditor. Peter Thiel-backed Vauld was in talks with Nexo, which is, in words, to acquire it. Nexo wants Vauld’s 800,000 customers to help it expand in Asia.

Nuri

Crypto bank Nuri has filed for insolvency. The company said its app, product, and services would continue to run. However, it cited falling crypto prices and other macroeconomic headwinds for shutting down.

Hodlnaut

Crypto lender Hodlnaut is facing a police probe for misrepresenting its exposure to UST. The company went bankrupt due to a $190 million loss sustained in the LUNA/UST crash. In November, it proposed a “haircut” that would give customers about 25 cents on the dollar.

Compute North

The company owes about $500 million to some 200 creditors. Major partners like Compass Mining said they had been told the reorganization would not affect services. Nevertheless, it filed for Chapter 11 bankruptcy on Sept. 23, citing both the effects of the crypto winter and the rising cost of power in Texas.

Freeway

Freeway, a crypto staking platform that offered investors returns of up to 43% on its “Supercharger” product, halted withdrawals on Oct. 23. The problem, it tweeted a few days later, was that “one of Freeway’s trading strategies appears to have failed.”

FTX Group

FTX was overwhelmed by a bank run, putting the world’s second-largest exchange under strain. Sam Bankman-Fried’s net worth dropped from $20 billion to an estimated $100,000. FTX had loaned Alameda $10 billion in customer funds — that it had no right to use — but lost most of that. Crypto entrepreneur SBF Ray Bankman-Fried has gone on an “I’m an idiot, not a crook” press tour after his arrest. He was arrested in The Bahamas hours before testifying to the House Financial Services Committee. Crypto’s credibility has taken a massive hit on both Main Street and Capitol Hill.

SALT

Crypto lender SALT blamed its withdrawal halt, announced on Nov. 15, on FTX. However, CEO Shawn Owen did not make clear exactly how FTX impacted SALT. “We have paused deposits and withdrawals on the SALT platform effective immediately,” Owen said.

BlockFi

BlockFi was one of the first victims of 3AC’s collapse and halted withdrawals due to the atmosphere of panic. Sam Bankman-Fried rode to the rescue, offering it a $250 million credit line that was eventually expanded to $400 million. Blockchain company BlockFi has $355 million frozen on the bankrupt exchange. Alameda Research now owes BlockFi $671 million. The SEC is still owed $30 million and will likely be ahead of regular creditors to get it. It will lay off almost 200 employees, about two-thirds of its staff.