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After Voyager and 3AC, Which Firms Will the Crypto Crash Bankrupt Next?

The crypto crash has claimed two fresh victims, and it’s likely to claim more. Broker Voyager Digital and VC firm Three Arrows Capital declared bankruptcy within a week of each other last week, and with prices remaining low — and the threat of contagion remaining high — there’s a good chance other companies will follow.

But who exactly? This is hard to predict with any real precision, but admissions from firms of liquidity and withdrawal issues provide observers with a number of strong hints as to which dominoes the crypto crash will topple next.

Fortunately, a review of the available public information suggests that the picture isn’t quite as desperate as some would suggest, with at least a few troubled companies taking steps in the last few days to improve their respective positions. At the same time, even though at least a few more exchanges or platforms are likely to fail, many of these remain relatively small, and may not have a massive impact on prices or the rest of the industry if they fail.

Are numerous crypto companies actually insolvent?

Firms the Crypto Crash Could Bankrupt Next

Underlining the seriousness of the situation, Sam Bankman-Fried — the CEO/founder of FTX — recently warned that the current situation is probably worse than most people realize.

“There are some third-tier exchanges that are already secretly insolvent,” he told Forbes.

In fact, aside from Voyager and Bloomberg — which were definitely insolvent now that they’ve applied for bankruptcy protection — there is a very good chance that more than a few platforms and companies are unable to meet their liabilities at this moment in time. This includes the following:

Celsius Network

Celsius is a crypto-lending platform which froze withdrawals in mid-June, claiming it had to “stabilise liquidity” amid “extreme market conditions.” Since the initial freeze it has asked its users for more time to resolve its issues, repaid loans, been accused of being a Ponzi scheme by a former investment manager, has cut 150 jobs, and has recently hired a new law firm to help it restructure.

Based on the fact that Celsius has been able to repay a large part of its outstanding debt, and on the fact that it’s cutting its costs, there’s an argument that it could survive. Then again, some observers have suggested that paying off debts is a sign that it’s “getting its books in order before filing for bankruptcy.”


Another crypto-lending platform, BlockFi appears to have encountered financial difficulties as a result of a loan to now-insolvent VC fund Three Arrows Capital. However, it received a ‘credit facility’ (basically a loan) worth $250m from FTX, which also signed a deal on July 1 giving it an option to acquire the platform, along with another $150m in credit. Has also laid off staff, while private investors have marked down warrants for BlockFi stock as worthless, with said warrants (which grant the right to buy private stock) having been priced at $67 as recently as April.

FTX’s apparent rescue of BlockFi has potentially saved it from collapse, even if there’s a case to be made that it remains in serious trouble.


Seychelles-based crypto-exchange, subject to rumors it has become insolvent, largely as a result of exposure to Terra/Luna and Three Arrows Capital. These rumors have been denied, yet this denial didn’t stop further speculation appearing to the effect that the exchange was planning to lay off staff. The exchange’s native token, KCS, has fallen by 40% over the past month.

Given the lack of evidence supporting claims of insolvency/liquidity issues, and given the lack of any withdrawal freeze, it’s hard to be confident that KuCoin faces a real threat of collapse.


A Singapore-based trading and lending platform that halted withdrawals in early July, citing “a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate.” Its chief financial officer, Jatin Mazalcar, departed the company a few days after.

As of writing, Vauld has in fact filed for insolvency protection in Singapore, meaning it’s basically bankrupt. While this protects the firm from claims for six months, it looks like it will be acquired by Nexo, pending negotiations.


An institutional brokerage that has disclosed exposure to 3AC’s collapse. That said, it has received financial support from owner Digital Currency Group, so it’s likely not in serious condition.


Seychelles-based exchange that paused withdrawals on its exchange in June, after a single customer — which later turned out to be Roger ‘Bitcoin Jesus’ Ver — failed to repay a large margin call, costing it $87 million in total. Is now issuing a debt token, rvUSD, in a bid to raise money to cover its losses.

It’s likely that CoinFLEX is in a serious position, since Roger Ver refuses to repay what the exchange claims he owes, arguing that the two sides had agreed CoinFLEX wouldn’t liquidate the long position he’d opened. Despite the seriousness of its predicament, it has recently claimed it would resume processing around withdrawals, assuming a successful token sale.


A Hong Kong-based lender-broker that defaulted on a $10m loan to Orthogonal Finance at the start of July. It had suspended withdrawals in mid-June, reportedly due to exposure to Celsius and Three Arrows Capital. Also in early July, appointed an investment banking firm specialized in restructuring and distressed mergers and acquisitions.

In light of Babel’s default on a relatively modest debt of only $10m, it’s very likely that it’s insolvent. In other words, expect it to collapse.

The Good News and the Bad News

There are a few other firms in distress worth mentioning, such as (exposed to a $270 million loss from Three Arrows), CoinLoan, and Uprise. And taken together with the firms above, two main themes stand out.

Firstly, lots of cryptocurrency platforms and firms are invested in each other, something which results in contagion as the failure of one (or more) threatens the solvency of others. Indeed, there have been claims that many DeFi and crypto platforms have been participating in a kind of circular lending game, whereby one deposits funds with the next, and so on, until the impression is created that lots of money is in the system. Of course, this creates now-obvious risks.

Secondly, many — although not all — of the firms that have collapsed or will collapse are relatively small, meaning future collapses may not have much of an impact on the market. For instance, Vauld’s application for insolvency protection yesterday hasn’t done much to send cryptocurrency prices even lower than where they already were.

As such, the conclusion here is that the market is perhaps unlikely to experience a massive collapse or bankruptcy anytime soon, even if speculation about even the biggest firms in the space has increased in past months. As suggested by technical indicators, it does seem like a bottom has been reached.

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CryptoVantage Author Simon Chandler

About the Author

Simon Chandler

Simon Chandler is a journalist based in London. He writes about technology, markets and politics, and has bylines for Forbes, Digital Trends, CCN, Wired, TechCrunch, the Verge, the Sun, the New Internationalist, and TruthOut, among many others. His Twitter handle is @_simonchandler_

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