A trading pause and a bailout bring Cryptocurrency terrible week to an end.


This week saw a worse of the cryptocurrency market’s collapse as big participants battled liquidations, withdrawal freezes, trade halts, and, in at least one instance, a bailout.

On Friday, cryptocurrency broker Voyager Digital Ltd. announced the suspension of trading, deposits, and withdrawals while BlockFi, a significant lender for digital assets, received support from exchange FTX US and hinted at an acquisition. The problems with the cryptocurrency hedge fund Three Arrows Capital Ltd., which was ordered to be liquidated this week by a judge in the British Virgin Islands and filed for Chapter 15 bankruptcy protection in New York, have completely turned both businesses upside down.

The value of the markets dropped by about $2 trillion, and traders were worried as the long Fourth of July weekend approached.

According to crypto investor and Bloomberg Opinion columnist Aaron Brown, “I had started to think the dominoes had stopped falling.” I don’t make any particular forecasts, but I think there will be more negative news by Tuesday morning.

The difficulties at Three Arrows, which suffered from big losses after placing sizable bullish bets on everything from Bitcoin to Luna, a component of the Terra ecosystem whose collapse in May caused a significant market spasm, are largely to blame for the industry’s recent liquidity problems. Three Arrows was started in 2012 by two former Credit Suisse traders, Zhu Su and Kyle Davies. It has come to represent the excesses of the industry during the bull run of the previous year when it built up leverage that hurt it when the market turned.

Blockchain.com and Deribit, a cryptocurrency derivatives exchange, announced this week that they are among the creditors who requested the liquidation of Three Arrows, revealing the full scope of their influence on the sector. A representative for Blockchain.com said that the company is also helping with investigations into the actions of Three Arrows, which Singapore’s central bank criticized for spreading false information.

According to Alex Felix, Managing Partner of CoinFund, “Crypto is a newborn market, yet tremendous competition has developed among service providers vying for the business of a tiny set of wholly new counterparties.”

Kyle Samani, co-founder and managing partner at Multicoin Capital, said that in order to protect retail clients, there need to be proper laws, transparency, and an industry coalition.

Stephen Ehrlich, the chief executive officer of Voyager, stated that the company needed more time to investigate strategic options, which Celsius Network, which has also stopped withdrawals, has been doing as well. According to a person familiar with the situation, Sam Bankman-Fried previously rejected a rescue request from Celsius. He has served as the industry’s lender of last resort.

In a statement, Ehrlich stated, “This was a very tough choice, but we feel it is the appropriate one given present market conditions.”

Following the revelation on Friday, Voyager fell as much as 43% in US trade, ranking it among the worst-performing cryptocurrency equities. Voyager is a New York-based company that offers trading in cryptocurrencies, staking (a way to get rewards for holding certain cryptocurrencies), and yield products.

Three Arrows sent Voyager a notice of default on a loan for about $675 million last month. It is actively pursuing recovery from the cryptocurrency hedge fund, including through the British Virgin Islands’ court-ordered liquidation process. It has a credit line from banker-trading Fried’s company, Alameda Research.

On the other hand, Bankman-Fried is already thinking about making more purchases as he grows his huge power in the sector. He suggested that his next target might be the contentious crypto-mining sector.

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