Voyager Digital filed for bankruptcy protection on July 6, marking the second bankruptcy in the crypto industry. However, the liquidity crisis does not seem to be resolved. Here we brief the process of the crisis.
- Fuse : LUNA
On May 8, the pool of UST and the original LUNA were out of balance. In just two days, UST was completely de-anchored from $1. By May 12, LUNA almost hit to zero.
On May 12, Bitcoin fell below $30,000.
- Three Arrows Capital got involved in the LUNA slump
On May 13, Zhu Su, founder of Three Arrows Capital, said that he supported the LUNA community. Note that at this time, Zhu Su was still trying to save the situation and was still active on Twitter to rebuild confidence for investors. At the same time, stETH also started to de-anchor slightly.
On May 17th, Terra founder Do Kwon proposed a plan to revive the Terra. The proposal was passed on May 25th. The original LUNA was completely abandoned.
On May 26, 3AC began to make large ETH transfers on the FTX exchange.
On June 1 and June 2, Size and Laevitas announced that they had received financing led by 3AC, but just the amount is considerably small, at $6 million and $2.5 million, respectively. In retrospect, these two investments should have been made earlier. The announcement at the time was more of a means to stop the spread of investor’s pessimistic sentiment.
- BlockFi surfaced
On June 6, South Korean crypto-asset fintech company Delio announced that it has signed an asset supply contract worth $600 million with crypto lending platform BlockFi and Three Arrows Capital. 3AC and BlockFi should have obtained fiat cash flow from Delio by using crypto assets as collateral. This case may indicate that BlockFi also has liquidity problems.
On June 14, 3AC began to sell stETH in exchange for ETH.
On June 15, Zhu Su, founder of 3AC, posted that he was communicating to solve the liquidity problem. Note that this is the last time Zhu Su appeared on social media and has not been heard from since. On the same day, a source said that 3AC had liquidated $400 million on the lending platform. Since then, there have been reports that 3AC’s ETH has been liquidated.
On the same day, a source said that 3AC liquidated USD 400 million on the lending platform, and the rumors of 3AC’s ETH being liquidated has been heard endlessly since then.
On June 17, Kyle Davies, co-founder of 3AC, said that the collapse of Terra caught us off guard, and it was clear that Terra was the root of all evil.
- Alameda Research and Genesis appear linked to 3AC
On June 18, Genesis reported it had liquidated position of a "large counterparty", which probably referred to 3AC. There are multiple DeFi protocols that say the whereabouts of their funds deposited on the 3AC platform are unknown. Rumors abounded in the market. An anonymous source exposured that 3AC's outstanding debts may hit to US$2 billion, and said they frequently misappropriated client funds.
On the same day, Voyager Digital signed terms with Alameda Research for a loan of $200 million and 15,000 bitcoins.
On June 19, Bitcoin fell below $20,000 while Ethereum fell below $1,000.
On June 21, FTX stepped in to assist BlockFi, helping the latter with a $250 million revolving credit line. SBF, founder of FTX, also stressed that he would prevent the spread of the crisis.
- Voyager Digital announces its debt connection with 3AC
On June 22, Voyager Digital stated that 3AC owed a total of 15,250 BTC and 350 million USDT debt, with a total value of nearly 700 million US dollars. Such a large amount doomed Voyager to go bankrupt.
On June 29, a court in the British Virgin Islands ordered the liquidation of Singapore-based 3AC.
On July 1, Blockchain.com applied to liquidate all of 3AC’s assets. The next day, 3AC sought bankruptcy protection from the New York court, and 3AC has officially entered the bankruptcy stage since then.
On July 2, cryptocurrency broker Voyager Digital announced a suspension of trading and deposits and withdrawals. Its stock price then fell sharply.
On July 6, Voyager Digital became the second institution to go bankrupt. At the same time, the Toronto Stock Exchange launched a delisting review of Voyager Digital. Note that Voyager Digital and Alameda Research also have large financial transactions.
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In addition to 3AC and Voyager, which have filed for bankruptcy, companies such as BlockFi, Alameda Research, and Genesis have also been affected. At present, BlockFi has received financial support from FTX, Alameda Research is a subsidiary of FTX, and Genesis has received DCG’s support, and it seems that the crisis has been alleviated. Will other companies fail in the next few weeks? Who will be next?
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