2022 is considered to be one of the worst years for the crypto market. As the end of the year, 2022 was approaching, we dig deeper to see what happened to different crypto firms during this year. This year was full of a bear market, different firms crash, and hacking. Top crypto exchanges like Terra Luna, Celsius, Voyager, FTX, Alameda, 3AC, and other firms went bankrupt due to certain specific reasons.
Let’s start with the most recent one. FTX crash was a shocker to the crypto market. It all started with a rumor that FTX does not have enough capital for reserve thus many customers fled and sold their portfolios. Not only FTX but all those 130 FTX-affiliated companies filed for bankruptcy weeks later. The market was red for a week and it never got its position back. According to Reuters, FTX “owes its 50 biggest creditors nearly $3.1 billion.”
It is considered to be the second-best crypto crash in the year 2022. In May 2022, more than 2 billion dollars worth of Terra Luna stable coin, UST, was unstacked and millions were quickly liquidated. Within a few hours, the price of the native token Luna fell by 90%, and then it almost came to nothing after a few days. It shook the whole market and wiped out more than 60 billion dollars from the market. The crypto market never returned to normal after this crash.
Only after a month after the Terra Luna crash did, the crypto market see another crash. On 13th July 2022, Celsius Network file for bankruptcy because of inflationary pressure and volatile conditions of the market. In the bankruptcy report, Celsius wrote that it has to owe $6.6 billion worth of assets while the value of the coins held by the company is $3.8 billion, which means that the company’s current debt is $2.8 billion.
Voyager was another victim of the Terra Luna crash. It is to file for bankruptcy on July 2022. The main reason for its failure was that it had partnered with Terra Luna and it went down with Terra. An exchange that was able to give more than 660 million dollars to one firm at the end of 2021, was on the verge of collapse in mid-2022. The total loss of Voyager was estimated to be more than 1 billion dollars.
The crypto crash was contagious after the Terra Luna crash and it amalgamated the Three Arrow Capital. On 27 June 2022, just one month after the Terra Luna crash, the 3AC filed two applications for bankruptcy in the British Virgin Islands (BVI). Just a week later, it filed for bankruptcy in the US too. On 11 July 2022, CNBC reported that the 3AC went from 10 Billion dollars to zero within a week. This collapse triggered downward the whole market and many other investors with it.
How did these bankrupt incidents lead to the Proof of Reserves?
After these majors failure of top crypto exchanges, the sentiments of many investors and users were not in a positive direction. Many fear and worried about their funds and the privacy of their data. Binance was the first one to come up with the idea of Proof of Reserves. Binance CEO, CZ, announced on Twitter to share Proof of Reserve in order to have the trust and belief of the users on these exchanges and urged other crypto exchanges to share theirs. After Binance, many other top crypto exchanges follow the suit and . came up with their Proof of Reserves.