Conducted by the Federal Reserve Board during the quarter Two aggressive rate hikes To combat rampant inflation. It caused fear of recession in the United States and other countries.
Bitcoin is closely related to price fluctuations in the US stock index. The sale of stocks weighed on the Bitcoin and crypto markets as investors dumped risky assets.
The first major episode of the previous quarter was the collapse of the algorithm’s stablecoin terraUSD and sister token Luna, which shocked the industry.
Stablecoin is a type of cryptocurrency that is usually fixed to real-world assets. TerraUSD, or UST, was supposed to be fixed one-to-one with the US dollar. Some stablecoins are backed by real assets such as fiat currencies and government bonds.But UST Managed by algorithm A complex system for burning and casting coins.
The system has failed. TerraUSD lost dollar peg I brought it The end of the related token Luna that is no longer worth it..
This episode resonated throughout the industry, with a knock-on effect, especially for the crypto hedge fund Three Arrows Capital. ThreeArrowsCapital was exposed to terraUSD (more on this below).
Cryptographic lender Celsius suspended customer withdrawal in June..
The company offered users a yield of over 18% when they deposited cryptocurrencies in Celsius. Then it lent the money to a crypto market player who was willing to pay high interest rates to borrow the money.
However, the slump in prices tried that model. Celsius cites “extreme market conditions” as a reason to suspend the withdrawal.
“We are taking significant steps to preserve and protect our assets and explore the options we have available,” Celsius said in a blog post on Thursday.
These options include “pursuing strategic transactions and restructuring debt, among other means”.
The Celsius issue has revealed the weaknesses of many lending models used in the cryptocurrency industry that offer high yields to users.
Three Arrows Capital is one of the most prominent hedge funds focused on cryptocurrency investment.
Founded by Zhu Su and Kyle Davies, the 10-year-old company, also known as 3AC, is known for its high-leverage bullish bets on the crypto market.
3AC was exposed to the collapsed algorithm stablecoin terraUSD and sister token luna.
The Financial Times Last month, US-based crypto lenders BlockFi and Genesis reported that they had liquidated some of their 3AC positions, citing people familiar with the matter. 3AC was borrowed from BlockFi, but couldn’t handle the margin call.
Margin calls are situations where investors have to invest more money to avoid losses in transactions made with borrowed money.
So 3AC is the loan default Worth more than $ 660 million from Voyager Digital.
As a result, Three Arrows Capital was liquidated.A person who knows this issue told CNBC this week.
The status of 3AC reveals the nature of highly leveraged trading in the industry these days.
Cryptocurrency exchange CoinFlex stopped withdrawing customers last month because of “extreme market conditions” and customer accounts that have fallen into negative equity.
CoinFlex claims that a customer who claims to be a well-known crypto investor, Roger Ver, owes the company $ 47 million. Ver, who has the nickname “Bitcoin Jesus” in an evangelical view of the early industry, denies borrowing CoinFlex money.
The exchange said that accounts that normally enter negative equity close their positions. However, CoinFlex and Ver had a contract that did not allow this.
CoinFlex Issued a new token called Recovery Value USD or rv USDIt has raised $ 47 million to allow it to resume withdrawals and offers a 20% interest rate to investors who are willing to buy and hold digital coins.
CEO Mark Lamb on CNBC this week, the company Number of distressed bond funds to buy tokens.. CoinFlex is Ver. We are also considering collecting funds from.