In the report submitted by the Chicago affiliate of the US Federal Reserve (FED), Last year, the devastating effects of bankruptcies in crypto money companies were included.
FED’s report in 2022 within 5 months in total 4.3 million crypto currency user $46 million loss demonstrated that he did. In the report, as chained happened in a way Voyager, Celsius, FTX, terra (LUNA), Three Arrows Capital (3AC), BlockFi And of Genesis bankruptcy was detailed.
In the first act of chain bankruptcies Voyager And Celsius TerraUSD (TUSD) It is stated that he succumbed to the collapse of the bank and the bankruptcy of the hedge fund 3AC. The Chicago Fed pointed out that these institutions lend money to 3AC but do not collateralize their loans. In the report, BlockFi and Genesis FTX by was immersed expressed.
In addition, the FED announced that most of these institutions offer utopian interest returns to their users, but this business model is not long-term.
Typically, interest yields of 7.4% to 9%, sometimes up to 17% were offered. All of this was unrealistic in a low interest rate environment.
On the other hand, most of these companies two-stage bankruptcy While it is stated that they came face to face, most of them succeeding in passing the first stage It was emphasized that they could not stand the second stage:
Celsius and Voyager both survived the first run, but succumbed to the second wave. Both Celsius and Voyager have bank runs twice. Second sinkings were smaller, but by then their balance sheets were so fragile that they went bankrupt.
Small investors suffered the most
Chicago Fed, the fastest withdrawal of big institutional investors’ money from sinking stock markets Small actors He stressed that he was in a difficult situation. Especially institutions and 500 thousand dollars The report stated that investors with assets on it were the first to leave the ship, and that this situation burned small investors.
Especially Celsius assets withdrawn during bankruptcy 35%′get down more than $1 million It was underlined that it was carried out by accounts with investments.
While the platforms had a large number of retail customers, large holdings, some of whom were sophisticated institutional customers, led the transactions. Large-scale account holders with over $500,000 in investments were the quickest to withdraw, drawing proportionally more of their funds. According to our estimates, 35% of all withdrawals, especially at Celsius, were made by account holders with investments of more than $1 million during this period.