Another one bites the dust

Author

Logan Cloak
July 15, 2022

GM, and welcome to RollCall by Rollfi!

Get caught up from the past week in 10 minutes or less:

  • Celsius files for bankruptcy 📉

  • 3AC breaks it silence 🤐

  • Global crypto regulations 🌎

  • Other stories from the week 📰

CELSIUS FILES FOR BANKRUPTCY

Just one week after Voyager Digital filed for Chapter 11 bankruptcy, Celsius is now doing the same.

Late last month we wrote about how crypto lending platforms like Voyager, BlockFi, and Celsius had begun pausing withdrawals on their platform due to a lack of liquidity. Now, Celsius is working to restructure their debt with DeFi protocols, restructure their business, and Chapter 11 will allow them to halt any civil litigations currently filed against them.

The company was seemingly trying to make its balance sheet look more attractive before filing for bankruptcy. Data shows that included in the debt restructuring was an $81.5M USDC loan paydown which allowed the company to retrieve $415M in Staked Ethereum (stETH) that had been held as collateral on Aave. Now, the company is reporting anywhere between $1B - $10B in assets and liabilities to the bankruptcy court.

Celsius also reports $167M in cash on hand to fund operations as the restructuring proceeds. However, some fear that customers will not be able to withdraw their deposits for quite a long time.

3AC BREAKS IT SILENCE

About a month ago, crypto investment firm Three Arrows Capital (3AC) collapsed. After a series of bad investments made on leverage with debt from companies like Celsius and reportedly treasury funds from several projects they had invested in, investors began to liquidate their positions in 3AC. Then, on July 1st 3AC too filed for bankruptcy.

Not much has been heard from the founders over the past month as the liquidation processes began though. Reports this week even claimed that the founders were non-cooperative with liquidators.

Then a few days ago, founder Zhu Su refuted those claims, claiming that liquidators were baiting them.

The whereabouts of the founders are still reportedly unknown at this point and liquidators claim they have not shown up for more than one zoom call.

Side note - "Wizards" on the crypto analytics platform Dune Analytics have taken a look at 3AC's holdings on the Ethereum network and show $51M of holdings as of writing this, with over $20M in the stablecoin $DAI and over $7.5M worth of NFTs (breakdown below). Keep in mind this is just on the Ethereum network and does not represent all of 3AC's holdings. You can view the entire dashboard here.

GLOBAL CRYPTO REGULATIONS

The Financial Stability Board (FSB), an international body that monitors the global financial system established by the G20 in 2009, released a statement this week on proposed international regulation of crypto.

The FSB wants to ensure robust regulation around crypto-assets and says they will report to the G20 Finance Ministers and Central Bank Governors in October with high-level recommendations for regulation and supervision of global stablecoins and crypto-assets to promote consistency, international cooperation, and coordination.

Interest in the crypto markets from the FSB arose because of an "increasing interconnectedness with the traditional financial system" and recent volatility in the markets.

While some may view this as negative news, the FSB did say in their statement that they do want to take "account of novel features of crypto-assets" and harness the "potential benefits of the technology behind them". We will definitely be keeping our eyes on this come October.

MORE STUFF FROM THE WEEK

  • Mt. Gox is finally repaying creditors from 8+ years ago which will introduce 140k Bitcoin to the market that was previously locked away.

  • More venture funds are entering the crypto markets with Lightspeed Ventures and Multicoin Capital introducing new crypto funds. Lightspeed announced 4 new funds totaling over $7.1B!

  • Aave announced the launch of their new decentralized stablecoin, GHO, that will be fully-collateralized and governed by the community.

  • GameStop's NFT marketplace has done more volume in its first 2 days than Coinbase's has since launch.

  • Nansen.ai analyzed the 300 most profitable addresses on ETH, and Sam-Bankman Fried's Alameda Research came in 1st with over $550M in trading profit.

GLOSSARY

We're confused too. We're here to help decrypt the crazy world of crypto.

  • Liquidity - the availability of liquid assets to a market or company. In this case, Celsius did not have enough available funds to refund everyone who made a deposit on their platform.

  • Staked Ethereum (or stETH) - stETH is a token created by Lido Finance that allows ETH holders to stake their ETH on ETH 2.0, earn yield and still have a liquid asset that can be traded.

  • Leverage - in the context of trading or investing, leverage refers to the use of debt or borrowed funds to magnify the impact of your trade. When executed well, it can result in magnified gains, when executed poorly it can result in margin calls, bankruptcy, and more.

  • Liquidation - in business this is the process of distributing remaining assets of a company to its claimants when a company is insolvent.

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