There is a record worldwide inflation and economic crisis. The heat of the crisis is felt by economies worldwide, with the USA experiencing a 9% inflation. This is the highest it has experienced in the last 45 years. The rise in food prices and the loss of currency values hugely affect cryptocurrencies and crypto firms. There are a lot of crypto firms that have collapsed since the recession. Firms such as Voyager, and 3AC, have filed for bankruptcy. In addition, other firms have either cut down the number of workers or frozen withdrawals.
Actions taken by crypto firms
- Coinbase stopped hiring and revoked offers from candidates who had not joined. Cut its labour force by 18%
- Crypto.com fired almost 200 employees
- BlockFi cut its labour force by 20%
- Vauld, cut the labour force and stopped withdrawals
Celsius is the current victim of the crypto recession
Celsius froze customer funds last month as investors raced to withdraw their assets amid a crash that saw the value of cryptocurrencies tumble worldwide. The company has now gone as far as to file for bankruptcy. The filing revealed that the company has $4.3bn of assets, set against liabilities of $5.5bn, of which $4.7bn is owed to its users, who numbered 1.7 million as of this month. In the document, its chief stated that the company made poor asset deployment decisions. These included giving 35,000 of the digital currency Ether to a company called Stake Hound, which then lost them due to an alleged error by a third company storing the assets, Fire blocks.
Celsius also had loans from a certain company between 2019 and 2020, but the company didn’t have Celsius collateral when they went to repay the loan. The cryptocurrency platform, valued at $3 billion last year, is filing for bankruptcy. The company believes this filling will provide a breathing spell for the debtors to negotiate. This will also implement a plan that will maximise the value of its business and generate meaningful recoveries for stakeholders as quickly as possible. The company’s recovery plan could involve using bitcoin generated by its crypto mining operation to plug the shortfall in its crypto assets. These crypto firms are facing the heat of the crypto crash. Although this is just a test and the ones that transpire, the future will be rewarding.