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Crypto Market Blues: Coping With Bankruptcies

Since 2022, the digital financial world has been rocked by a wave of crypto bankruptcies, with some of the industry’s biggest names going under. From Voyager to Celsius, many of the industry’s major players have been forced to shut down, leaving investors wondering what went wrong.

In this casino news, we’ll explore what caused these bankruptcies and what they mean for the future of crypto.

Crypto Bankruptcies: A Rollercoaster of Market Volatility

Among the various bankruptcies in the crypto world, below are the most recent. 

Haunting Tales from the Casino’s Shadowy Past


Voyager Digital

In mid-2022, Voyager Digital, a popular crypto exchange, filed for Chapter 11 bankruptcy. The case was a major blow to the crypto world, shocking many investors. One of the main causes of Voyager’s bankruptcy was its exposure to the crypto hedge fund Three Arrows Capital, which went bankrupt earlier in the year. The company tried to find a buyer to stay afloat but was unsuccessful, leaving Voyager with significant losses and unable to recover.

Casino users of this cryptocurrency were shocked at these events, I knew his casino games could not be funded any longer with this virtual coin.

Celsius

Celsius was a popular crypto lending platform that offered users interest in their crypto holdings. However, the company was highly leveraged and had invested heavily in risky assets. When the crypto market crashed in the summer of 2022, Celsius could not meet its obligations and filed for bankruptcy. As a result, many users could not access their funds. It sparked a wave of panic in the crypto and online casino world.

Crypto Bankruptcies: FTX Could Not Escape

The next major crypto bankruptcy of 2022 was that of FTX, one of the largest and most high-profile crypto exchanges. FTX’s bankruptcy was even more dramatic than Celsius’s, with allegations of fraud and misuse of customer funds.

One key factor in FTX’s bankruptcy was that it had mixed customer funds with its own. The company couldn’t separate customer funds from its money, leading to a liquidity crisis. Ultimately, it prevented the company from meeting customer withdrawals.

BlockFi

BlockFi’s bankruptcy, which occurred in late 2022, was similar to Celsius’s in that it had overexposed itself to risky assets. However, one key difference was that BlockFi took a large FTX loan. So, when FTX went bankrupt, BlockFi’s financial situation became untenable, forcing it to file for bankruptcy.

BlockFi had invested heavily in a crypto asset called FTT, which FTX issued. This created a strong connection between BlockFi and FTX, and when FTX collapsed, BlockFi was dragged down with it. The case highlights the dangers of having too much exposure to a single company or asset.

Genesis Global Capital

Genesis Global Capital, a crypto lender, filed for bankruptcy in January 2023. It had been heavily exposed to FTX and Three Arrows Capital. When both companies collapsed, Genesis suffered massive losses and had no choice but to file for bankruptcy.

Zipmex

Another crypto bankruptcy in 2023 was Zipmex, a crypto exchange based in Singapore. Like the other bankruptcies, Zipmex suffered from a lack of liquidity, exacerbated by Three Arrows Capital’s collapse.

Other Crypto Bankruptcies of 2023

Some crypto exchanges that filed for bankruptcy in 2023 include Bittrex Global, Txbit, and Bitfront, all citing the lack of liquidity and Inability to compete with other exchanges.

Illustratively, many other crypto companies reliant on Three Arrows Capital for funding were forced to lay off staff and cut costs. For example, Voyager Digital laid off many of its staff. In addition, FTX’s bankruptcy has caused several other crypto companies, such as Genesis and Tether, to come under scrutiny.

Ripple Effects of Crypto Bankruptcies

The crypto bankruptcies of 2023 have hurt the industry, causing investors to lose confidence and triggering a wider sell-off of crypto assets. This has led to a decline in the price of many cryptocurrencies, including ones from top gaming crypto companies, and has caused several crypto companies to struggle.

In addition, the collapse of crypto companies like FTX has spotlighted the use of crypto in gaming, such as the popular game Money Minter Slot. While Money Minter Slot itself has not been affected by the bankruptcies, the collapse has led to questions about the use of crypto in gaming and whether it’s a sustainable model.

Another consequence of the crypto bankruptcy is a renewed focus on the “self-custody” of crypto assets. This means storing them in a wallet you control rather than relying on a third-party platform. It aims to reduce the risk of losing access to your assets if a crypto company goes bankrupt.

Lastly, the recent crypto bankruptcies have led to a closer examination of some crypto platforms’ gambling terms and conditions. For example, many platforms had terms allowing them to use customer funds for their purposes, which is now a concerning risk factor.

Survive the Crypto Crunch!

Just as the outcome of an American Roulette spin is random, so is the outcome of a crypto investment. The crypto bankruptcies of 2023 have caused a setback for the industry, but they do not spell the end of crypto. The technology behind crypto is revolutionary and can potentially transform finance and other industries. The future of crypto may be uncertain, but it promises to be innovative and disruptive.

Learn more about cryptocurrencies and casino gaming available in the virtual market, by reading our casino guides section.

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