Cryptocurrency meltdown: Brutal Week Ends With a Trading Halt and a Bailout
The meltdown in cryptocurrency markets deepened this week, as major players contended with liquidations, withdrawal freezes, trading halts -- and, at least in one case, a bailout.
Crypto broker Voyager Digital Ltd. on Friday announced a suspension of trading, deposits and withdrawals, while BlockFi, a major digital-asset lender, won the backing of exchange FTX US with the potential to be acquired. Both companies were upended by the woes of Three Arrows Capital Ltd., the beleaguered crypto hedge fund that was ordered for liquidation by a British Virgin Islands court this week and filed for Chapter 15 bankruptcy protection in New York.
Meanwhile, crypto markets slumped, adding to a decline that has wiped away some $2 trillion of market value.
“I had begun to think that dominoes had stopped falling in mid-June,” said Aaron Brown, a crypto investor and Bloomberg Opinion contributor. “I suspect by Tuesday morning there will be more bad news, although I make no specific predictions.”
Much of the industry’s recent liquidity issues stem from the troubles at Three Arrows, which suffered from large losses after making big bullish bets on everything from Bitcoin to Luna, part of the Terra ecosystem whose implosion in May sparked a major market spasm. Founded in 2012 by Zhu Su and Kyle Davies, former Credit Suisse traders, the fund has become emblematic of the industry’s excesses during last year’s bull run, when it built up leverage that proved destructive when the market turned.
The fuller extent of their impact on the industry is starting to emerge: Blockchain.com and Deribit, a crypto derivatives exchange, this week confirmed that they are among creditors that sought for the liquidation of Three Arrows. A spokesperson with
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