The list of damage is growing every day.
The crypto market has lost more than $2.1 trillion since its November high, according to data from the firm CoinGecko.
Bitcoin, the most popular digital currency, is down 71% to $20,086.93 from its Nov. 10 all-time high of $69,044.77. Ether, the Ethereum platform token and second largest cryptocurrency by market value, is down 76.8% to $1,129.75 from its November all-time high of $4,878.26.
In addition to cryptocurrencies, firms are also weakened. Lender Celsius Network has gone silent after suspending fund withdrawals and all other operations on its platform. Visitors and customers are no longer greeted with a message asking them to be patient.
Sister tokens Luna and UST, or TerraUSD, of the Terra ecosystem have collapsed, causing the disappearance of at least $55 billion. Singapore-based crypto hedge fund Three Arrows Capital (3AC) has just defaulted on a loan worth more than $670 million, after it had $200 million exposure to Luna.
"The Terra-Luna situation caught us very much off guard,” 3AC co-founder Kyle Davies.
Voyager Digital and the firm BlockFi, which lent large sums of money to 3AC, had to go to the quantitative trading firm Alameda Ventures for a bailout to avoid panic.
Voyager Digital (VYGVF) "has accessed US$75 million of the line of credit made available by Alameda and may continue to make use of the Alameda facilities to facilitate customer orders and withdrawals, as needed," the company said.
Some Exchanges 'Are Already Insolvent'
Alameda is owned by young crypto billionaire Sam Bankman-Fried, CEO and founder of cryptocurrency exchange FTX.com.
Bankman-Fried brings additional bad news. According to the billionaire, who has become the "savior" of the crypto industry in spite of himself, many projects and protocols are already insolvent. He therefore warns that we could witness a cascade of bad announcements but does not give names.
"There are some third-tier exchanges that are already secretly insolvent,” Bankman-Fried told Forbes.
The young entrepreneur recently acquired a 7.6% stake in RobinHood (HOOD), which is in serious financial difficulty. Rumors surfaced on June 27 that Bankman-Fried could take over the entire brokerage.
But in his interview with Forbes, the young entrepreneur denies any active merger talks with Robinhood.
There are currently just over 500 cryptocurrency exchanges. We obviously know the most popular ones like Binance, Coinbase (COIN), Gemini, Kraken, OKX, KuCoin, Crypto.com, FTX.com.
But there are also obscure platforms like BTCC, CoinBene, BTC Exchange or C-CEX which have no recorded volume of exchanges during the last 24 hours.
It goes without saying that if big names like RobinHood are in trouble, lesser-known exchanges must suffer more.
In addition to RobinHood, many crypto companies, and more specifically exchanges, have recently announced cost reduction measures to deal with the crash in cryptocurrency prices and the uncertainties related to the macroeconomic environment.
Coinbase has cut 18% of its workforce and rescinded employment offers to new hires. Crypto.com, Gemini, Bitso, Buenbit, BlockFi and Bitpanda, an exchange backed by billionaire Peter Thiel, have also announced layoffs.
"We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways. If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side," L.J Brock, chief people officer, said in a blog post on June 2.
