For those of you new to crypto and the Litepaper, let us get you up to speed with what’s been happening in the DeFi space:
- Back in May, the cryptocurrency Luna ($LUNA.X) collapsed to nearly $0 along with its stablecoin (lol) UST ($UST.X).
- One of the world’s largest and most well-known cryptocurrency hedge funds, Three Arrows Capital, was heavily invested in Luna to the tune of, allegedly, $200 million. They also had exposure to BlockFi ($BLOCKFI.P) and Axie Infinity ($AXS.X), the latter of which was hacked for $700 million last year. As a result, Three Arrows Capital was forced into liquidation last week.
- The resulting fallout from Luna’s collapse caused massive sell-offs in the cryptocurrency markets. So much so that various cryptocurrency services froze customers from withdrawing, selling, or buying – Celsius is one of those services.
- The collapse has been a contagion, exposing which companies and firms were overleveraged, which ones failed GAAP 101, which ones were morons, which are crooks, and which ones were smart – or lucky.
Voyager
In the wee hours of this Wednesday, Voyager announced, “Voyager Digital Commences Financial Restructuring Process to Maximize Value for All Stakeholders.” That’s pompous speak for, “We’re bankrupt d00dz, 4 reelz.”
I just need to say this: nothing pisses an investor more than when a company says, ‘it wasn’t our fault; it was the other guy.’
Do you mean out of billions of dollars, you (Voyager) couldn’t find or hire anyone in your risk department who could have told you, ‘hey, maybe loaning out $350 million in USD Coin ($USD.X) and 15,250 Bitcoin ($BTC.X) to Three Arrows Capital represents what could be just a smidge too much of our liabilities to put into one company?’ /endrant
Customers and depositors are still locked out of making any withdrawals on Celsius and Voyager.
Vauld
You may or may not have heard of this crypto exchange, but it’s backed by Peter Thiel, Pantera Capital, and Coinbase ($COIN) Ventures. The Singapore-based cryptocurrency exchange announced yesterday that it had pulled a Celsius on its customers: no withdrawals, no trading.
Vauld announced they’re cutting 30% of their staff, slow hiring, and chopping executive pay by 50%. Additionally, it’s looking at restructuring.
Restructuring is just another way of saying bankruptcy. However, it’s possible that Vauld get could be lifted to being on life support – more details on later in this Litepaper. 💀