3AC, Celsius, and Voyager are in trouble – despite the DeFi woes, signs of recovery in the market


Coinmotion brings you all the hottest and most important crypto news of the week in one reading. You no longer need to scour social media or try to read every possible crypto news to keep up to date with what’s going on. We will do it for you.

Winds change quickly in the crypto market and a lot can happen in a short time. Last week was no exception. The distress of DeFi loan services is deepening, Meta is losing tens of millions of dollars per day, but at least the Bitcoin bottom seems to finally be in. Ethereum is making crypto history, and so is the infamous Bulgarian crypto scammer, who was recently added to the FBI’s Most Wanted list.

Tune in to the hottest news in the crypto world.

Bitcoin on the rise – finally

Bitcoin is showing signs of recovery – its price has risen from the June lows of 17,000 euros to 23,000 euros. During the last 7 days, Bitcoin has been up a solid 7 %.

Bitcoin’s price has been trying to find a foothold for more than 6 months after the long, seemingly endless downward slide. Bitcoin’s price was at an all-time high in November last year, when it almost hit the 60,000 euro ($70,000) mark. Since then, the drop has been drastic, which at times, is typical for the crypto market. Bitcoin also recorded a historical 9 “red weeks” in a row from March to June.

Bitcoin’s fundamentals, however, have not changed for the worse. On the contrary, the security of the Bitcoin network is at an all-time high, which indicates that the network has more computing power from Bitcoin miners than ever before.

So, what’s behind the price drop? In short, a bad economic situation caused by the corona pandemic and the central bank interest rate hikes. The stock market has fallen drastically this year and dragged the cryptocurrency market along with it. Speculative investment instruments, which still include Bitcoin and other cryptocurrencies, tend to quickly feel the effects of a recession. Russia’s war against Ukraine has also spiced up the financial markets.

Now that Bitcoin’s price is on the rise again, a question arises: is the bottom in?

Investors are closely watching the actions of central banks to curb the record-high inflation. It remains to be seen how future interest rate hikes will affect Bitcoin’s price development.

3AC, Celsius, and Voyager in trouble

The collapse of the Terra Luna ecosystem caused a huge domino effect in the crypto and DeFi markets, with 3AC, Celsius, and Voyager being the latest to fall.

3AC – how did the most significant crypto hedge fund collapse?

3AC, i.e., Three Arrows Capital, founded by school friends Su Zhu and Kyle Davies, was one of the world’s largest crypto hedge funds. On the scale of Wall Street, 3AC, which managed a few billion dollars, was a minor player. But in the digital asset market, it was a heavyweight contender.

Zhu and Davies made 3AC the most important hedge fund in the crypto market, but they bet everything on the continued rise in prices. As Bitcoin fell from its 2021 highs, 3AC bet on a quick recovery in the crypto market with borrowed money. However, the market continued to fall. In mid-June, 3AC began to miss margin calls from the companies financing its trading. 3AC couldn’t pay its debts and declared bankruptcy on July 1st when Bitcoin traded below 20 thousand dollars.

The latest twist in the 3AC saga came about a week ago when an insider told Cointelegraph that 3AC’s stake in crypto options platform Deribit is much smaller than the company had claimed. They were believed to hold approximately 500 million dollars in Deribit shares, but according to the source, the actual value is closer to 25 million.

What happened to Celsius?

The cryptocurrency lending service Celsius, which had almost $12 billion in deposits still in mid-May, is also in deep trouble.

Celsius’ problems began after it made a large investment in a token called stETH. StETH enables investors and companies to stake their tokens in the Ethereum blockchain and earn passive income through DeFi. The steep price drop in May caused many users to withdraw their funds from the Celcius platform, but they could not afford it.

On June 12th, the company decided to suspend withdrawals due to “extreme market conditions”, and this raised a storm on social media. A week later, the company’s Twitter account went silent.

Celsius’ situation has been compared to Mt. Gox – once the world’s largest crypto exchange, which went bankrupt in 2014. Celsius’ lawsuits will take a long time to settle, and customers will likely have to wait a long time for their deposits to be returned.

Voyager is the latest domino to fall

Like 3AC and Celsius, Voyager is also in trouble. Its difficulties stem from a butterfly effect the Terra ecosystem collapse started.

Voyager was a significant player in crypto lending and trading. Voyager was one of the few digital asset brokers listed on stock markets around the world. At its peak, the company had 3,5 million users and managed nearly $6 billion in assets, comparable to a medium-size asset management firm.

The previously mentioned Three Arrows Capital, a widely respected Singaporean hedge fund, was at risk of failing to pay Voyager. 3AC was one of Voyager’s biggest customers, so when it collapsed, it got into trouble.

However, Voyager has a guardian angel – Sam Bankman-Fried, CEO of the cryptocurrency exchange FTX, who promised to return 100% of the funds lended by Voyager’s customers. FTX naturally has their own agenda; the company strives to gain value for itself through Voyager by acquiring its customers and assets. FTX has recently made other significant moves, such as making an offer for another crypto loan service, BlockFi.

Ethereum The Merge – final test in early August

Ethereum is the second largest cryptocurrency in the world after Bitcoin. It is the leading platform for decentralized finance, NFTs, and smart contracts. Ethereum, which operates with the Proof of Work consensus mechanism, has hinted at a transition to Proof of Stake from the early whitepaper created by Vitalik Buterin. The Ethereum community, anticipating The Merge for years, is finally getting a reason to rejoice, as the final test before the transition will take place at the beginning of August.

In other words, Ethereum is one step away from the expected Merge. And the final step is just a few days away.

According to an announcement by the Ethereum Foundation, the final test will take place on the Goerli/Prater testnet. It is the third network test before moving to Proof of Stake. The Merge is expected to take place in mid-September.

Earlier in July, the Sepolia testnet worked seamlessly, and in June, the Ropsten testnet also successfully transitioned to Proof of Stake.

The Merge is a historic, significant, and highly anticipated event in the crypto market. It should make Ethereum, which has suffered from high transaction costs, significantly more scalable and environmentally friendly. According to the Ethereum Foundation, Proof of Stake will make Ethereum 99% more environmentally friendly.

Read more: The Future of Ethereum

The main architect behind the world’s biggest crypto-pyramid scam is still missing

Considered the world’s biggest crypto pyramid scam, OneCoin is still on the authorities’ list of unsolved cases. The project, marketed as a “Bitcoin killer” between 2014 and 2019, turned out to be a pyramid scheme after several warnings from the US government.

OneCoin didn’t even have its own blockchain, and yet the fraudsters managed to raise an estimated 4-6 billion dollars from investors around the world.

The main character behind OneCoin was Bulgarian fraudster Ruja Ignatova. Ignatova, who went by the nickname “Cryptoqueen”, disappeared in October 2017 and has been on the run ever since. In July, the FBI added Ignatova to the list of ten most wanted persons.

Now the authorities are trying to find Ignatova in Greece. Ignatova flew to Athens in 2017 and then disappeared. The case investigators believe that the OneCoin scammer is still somewhere in Greece, but the investigations have still not shown results. In addition to the FBI, Ignatova is also wanted by Interpol and Europol.

Metaverse consumes funds – Meta reported a $2.8 billion loss in Q2

Meta’s metaverse division Facebook Reality Labs (FRL) has now posted a loss of nearly $6 billion this year. FRL focuses on AR and VR functions and develops Meta’s own metaverse. In the first quarter, the division posted a loss of $2.96 billion, and while analysts expected an even more significant figure for the second quarter, the Q2 loss of $2.81 billion is massive.

However, if the company’s CEO Mark Zuckerberg is to be believed, Meta’s future is extremely bright. At the company’s investment event, Zuckerberg told analysts that Meta is more focused on growing the long-term metaverse and Instagram Reels, rather than maximizing short-term profits. According to Zuckerberg, the development of the metaverse can bring hundreds of billions if not trillions of dollars in income in the future.

The views, thoughts, and opinions expressed in the text belong to the author and not necessarily to the author’s employer, organization, committee, or other group or individual.

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