{"id":23415,"date":"2022-07-15T10:50:47","date_gmt":"2022-07-15T10:50:47","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=23415"},"modified":"2022-07-15T16:16:14","modified_gmt":"2022-07-15T16:16:14","slug":"crypto-collapse-celsius-real-liabilities-and-fake-assets-voyager-still-bankrupt-3ac-owns-cryptodickbutt-1462","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2022\/07\/15\/crypto-collapse-celsius-real-liabilities-and-fake-assets-voyager-still-bankrupt-3ac-owns-cryptodickbutt-1462\/","title":{"rendered":"Crypto collapse: Celsius\u2019 real liabilities and fake assets, Voyager still bankrupt, 3AC owns CryptoDickButt #1462"},"content":{"rendered":"<p><b><i>By Amy Castor and David Gerard<\/i><\/b><\/p>\n<ul>\n<li aria-level=\"1\">If you like our work, please do sign up for our Patreons \u2014 here\u2019s <a href=\"https:\/\/www.patreon.com\/amycastor\">Amy\u2019s<\/a>, and here\u2019s <a href=\"https:\/\/www.patreon.com\/davidgerard\/overview\">David\u2019s<\/a>.<\/li>\n<li aria-level=\"1\">Patrons can also get a couple of<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/05\/bitcoin-it-cant-be-that-stupid.png\"> \u201cBitcoin: It Can\u2019t Be That Stupid<\/a>\u201d stickers just by asking. (Yes, Amy\u2019s patrons too.)<\/li>\n<li aria-level=\"1\">David has<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/11\/26\/get-signed-copies-of-libra-shrugged-and-attack-of-the-50-foot-blockchain\/\"> signed author copies of his books<\/a> for sale.<\/li>\n<li aria-level=\"1\">Sign up on<a href=\"https:\/\/amycastor.com\/\"> Amy\u2019s blog<\/a> to see every new post she makes as it goes up, and<a href=\"#byemail\"> click here and enter your email address<\/a> for every new post on David\u2019s blog as it goes up.<\/li>\n<\/ul>\n<p>\u201cCeFi\u201d is a term for centralized investment firms that play the DeFi markets. Quite a few of these have been collapsing spectacularly of late, and one day we hope to write about other things!<\/p>\n<p>DeFi advocates have been furiously denying that the huge failures of CeFi firms have anything to do with DeFi. [<em><a href=\"https:\/\/twitter.com\/search?q=CeFi%20Defi&amp;src=typed_query\">Twitter<\/a>; <a href=\"https:\/\/panteracapital.com\/blockchain-letter\/defi-worked-great\/\">Pantera<\/a><\/em>]<\/p>\n<p>It&#8217;s technically true that DeFi isn\u2019t CeFi \u2014 but it&#8217;s not true financially. When <a href=\"https:\/\/amycastor.com\/2022\/07\/09\/crypto-collapse-3ac-voyager-celsius-and-other-defi-casualties\/\">a CeFi company is the third biggest single player in the DeFi markets<\/a> \u2014 as Celsius was \u2014 then CeFi is an inseparable part of DeFi as far as the flows of cash go.<\/p>\n<p>As a product, CeFi is centralized access to DeFi. CeFi is where the money comes from.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/cryptodickbutt1462\/\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-23416\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/cryptodickbutt1462.png\" alt=\"\" width=\"340\" height=\"210\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/cryptodickbutt1462.png 680w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/cryptodickbutt1462-300x185.png 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/cryptodickbutt1462-348x215.png 348w\" sizes=\"auto, (max-width: 340px) 100vw, 340px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<h3>Three Arrows Capital, proud owners of CryptoDickButt #1462<\/h3>\n<p><i>\u201ci used to be an investor like you, until i took three arrows to the knee\u201d \u2014 Zamujasa<\/i><\/p>\n<p>How quickly things change!\u00a0Three Arrows Capital (3AC) had $3 billion in assets under management in April. At 3AC\u2019s peak, it boasted $18 billion AUM.<\/p>\n<p>But it turned out that 3AC had put as much as $450 million (or &#8220;$450 million&#8221; in cryptos) into Terraform Labs\u2019 Anchor protocol, which relied on Terra\u2019s UST stablecoin, <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/05\/10\/terras-stablecoin-does-a-2008-crisis-ust-crashes-and-takes-bitcoin-with-it\/\">which collapsed in early May.<\/a><\/p>\n<p>And everyone else was exposed to 3AC.<\/p>\n<p>On June 27, Voyager <a href=\"https:\/\/www.prnewswire.com\/news-releases\/voyager-digital-provides-market-update-301575492.html\">announced<\/a> that 3AC had defaulted on a $650 million loan. The same day, a court in the British Virgin Islands, where 3AC is incorporated, ordered the company to liquidate. The court appointed Teneo as liquidator. Less than a week later, Teneo filed for bankruptcy on 3AC\u2019s behalf in New York to preserve the firm\u2019s US assets. (We presume they\u2019ll also file for bankruptcy in Singapore, as 3AC had assets there as well.)<\/p>\n<p>Teneo is represented by Latham and Watkins. 3AC are represented by law firms Solitaire and Advocatus Law. Judge Martin Glenn is overseeing the US bankruptcy in the Southern District of New York.<\/p>\n<p><a href=\"https:\/\/www.teneo.com\/person\/christopher-farmer\/\">Christopher Farmer<\/a> and <a href=\"https:\/\/www.teneo.com\/person\/russell-crumpler\/\">Russell Crumpler<\/a> of Teneo are now trying to track down 3AC founders Su Zhu and Kyle Davies \u2014 wherever they are \u2014 and figure out if the company has anything left of value.<\/p>\n<p>Last month, when Teneo\u2019s Farmer flew to Singapore to track down 3AC founders, he found the firm\u2019s office had been abandoned since late May or early June. Mail was piling up inside the door: [<a href=\"https:\/\/amyhcastor.files.wordpress.com\/2022\/07\/c221408e-2fea-4c9b-b1ee-d56d0c659c1b.pdf\"><i>Motion for provisional relief<\/i><\/a><i>, July 8, PDF<\/i>]<\/p>\n<blockquote><p>The offices appeared vacant save for inactive computer screens. While the door was locked and there did not appear to be any people on the premises, I also observed signage for \u201cThree Arrows Capital\u201d and a number of unopened letters addressed to the Debtor (individually or care of TAC Pte) that had either been pushed under the door or had been placed up against the outside of the door.<\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/07\/15\/crypto-collapse-celsius-real-liabilities-and-fake-assets-voyager-still-bankrupt-3ac-owns-cryptodickbutt-1462\/3ac-door\/\" rel=\"attachment wp-att-23417\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23417\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/3ac-door.png\" alt=\"\" width=\"388\" height=\"512\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/3ac-door.png 388w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/3ac-door-227x300.png 227w\" sizes=\"auto, (max-width: 388px) 100vw, 388px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><small><em>Note lack of carpet \u2014 3AC&#8217;s rugpull<\/em><\/small><\/p>\n<p>&nbsp;<\/p>\n<p>3AC didn\u2019t cut off withdrawals until <a href=\"https:\/\/twitter.com\/zhusu\/status\/1536876343815983104\">14 June<\/a> \u2014 but they already knew they were screwed, and had skipped town.<\/p>\n<p>Zhu and Davies aren\u2019t playing ball. Teneo had a Zoom call with Zhu and Davies\u2019 lawyers: \u201cWhile persons identifying themselves as \u2018Su Zhu\u2019 and \u2018Kyle\u2019 were present on the Zoom call, their video was turned off and they were on mute at all times with neither of them speaking despite questions being posed to them directly.\u201d [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-07-11\/three-arrows-founders-whereabouts-unknown-stymying-liquidators#xj4y7vzkg\"><i>Bloomberg<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.ph\/B6zvZ\"><i>archive<\/i><\/a>]<\/p>\n<p>Teneo is increasingly concerned that Zhu and Davies will attempt to move their assets to outside accounts. So far, the pair have turned over only a \u201cpro forma\u201d disclosure of assets. Critical information such as bank accounts is missing.<\/p>\n<p>On 12 July, Teneo got US court approval to subpoena Zhu and Davies for depositions and seek documents regarding 3AC\u2019s bank accounts, books and records, and crypto wallets. [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysb.312810\/gov.uscourts.nysb.312810.32.0.pdf\"><i>Order granting provisional relief<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.wsj.com\/articles\/three-arrows-crypto-hedge-funds-founders-at-odds-with-liquidators-11657649920\"><i>WSJ<\/i><\/a>]<\/p>\n<p>The same day, Zhu, one of the missing 3AC founders, tweeted copies of two bizarre emails from their lawyer to Teneo explaining how they&#8217;re just too busy to hand over bank records right now. They\u2019re also upset at Teneo for not exercising a StarkWare token warrant \u2014 that is, they\u2019re upset the liquidators didn\u2019t spend some of the remaining money on buying <i>even more<\/i> cryptos. [<a href=\"https:\/\/twitter.com\/zhusu\/status\/1546801270014758912\"><i>Twitter<\/i><\/a>; <a href=\"https:\/\/decrypt.co\/104922\/three-arrows-capital-says-cooperation-with-liquidators-met-baiting\"><i>Decrypt<\/i><\/a>]<\/p>\n<p>StarkWare is a planned layer 2 solution for ethereum. It doesn&#8217;t have a token yet, but it does have options on future tokens. We\u2019re guessing that Zhu is mainly pissed off with the StarkWare warrant not being exercised because he&#8217;s one of StarkWare\u2019s investors. 3AC took part in StarkWare\u2019s $75 million funding round in 2021. [<a href=\"https:\/\/twitter.com\/BuckyCantor\/status\/1546819733080743936\"><i>Twitter<\/i><\/a>; <a href=\"https:\/\/twitter.com\/starkwareltd\/status\/1374754476414939146?lang=en\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Bloomberg on 3AC: \u201cFor all the complexity of the new crypto ecosystem \u2014 the \u2018smart contracts,\u2019 reams of online white papers, and heady talk of decentralized finance \u2014 it still proved to be a giant wager on the simple idea that there would always be more buyers for digital coins and prices would mostly keep going up.\u201d [<a href=\"https:\/\/www.bloomberg.com\/news\/features\/2022-07-13\/how-crypto-hedge-fund-three-arrows-capital-fell-apart-3ac#xj4y7vzkg\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>3AC borrowed millions from Voyager and BlockFi user deposits, and bought &#8230; CryptoDickButt NFT #1462. [<a href=\"https:\/\/www.reddit.com\/r\/CryptoCurrency\/comments\/vy84rw\/3ac_borrowed_millions_from_voyagerblockfi_user\/\"><i>Reddit<\/i><\/a>]<\/p>\n<p>We\u2019re sure they didn\u2019t just sell their personal NFTs to the \u201ccompany\u201d as a way to cash out. Remarkable bird, the CryptoDickButt, inn&#8217;it, ay? Bewdiful plumage! [<a href=\"https:\/\/nftgo.io\/asset\/ETH\/0x42069abfe407c60cf4ae4112bedead391dba1cdb\/1462\"><i>NFTgo<\/i><\/a>]<\/p>\n<p>Teneo has invited 3AC creditors to submit claims and to attend a meeting on July 18. Anyone who has claims in the liquidation should send an email to 3ACliquidation@teneo.com before 12pm BVI time on 15 July \u2014 that\u2019s today! [<a href=\"https:\/\/twitter.com\/DrSoldmanGachs\/status\/1547173027540267009\"><i>Twitter<\/i><\/a>]<\/p>\n<h3>Celsius<\/h3>\n<p>Celsius hired new \u201crestructuring\u201d lawyers, Kirkland &amp; Ellis, on 10 July, replacing Akin Gump Strauss Hauer &amp; Feld. Kirkland &amp; Ellis are the same lawyers Voyager used to take themselves bankrupt. [<a href=\"https:\/\/www.wsj.com\/articles\/troubled-crypto-lender-celsius-hires-new-restructuring-lawyers-11657473712\"><i>WSJ<\/i><\/a>]<\/p>\n<p>Celsius filed for Chapter 11 bankruptcy, announcing the move at 8:15 pm ET on 13 July. [<a href=\"https:\/\/www.businesswire.com\/news\/home\/20220713005911\/en\/Celsius-Network-Initiates-Financial-Restructuring-to-Stabilize-Business-and-Maximize-Value-for-All-Stakeholders\"><i>Press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/blog.celsius.network\/important-community-update-dafde3c6b456\"><i>blog post<\/i><\/a><i>; <\/i><a href=\"https:\/\/blog.celsius.network\/updated-faq-a7b03e0caeaa\"><i>blog post<\/i><\/a>]<\/p>\n<p>Here\u2019s the filings. The first day pleadings are the detailed filings; the rest are lists of creditors and debtors. [<a href=\"https:\/\/cases.stretto.com\/celsius\/court-docket\/court-docket-category\/1196-first-day-pleadings\/\"><i>First day pleadings<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/cases.stretto.com\/celsius\/court-docket\/voluntary-petitions\/\"><i>voluntary petitions<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/cases.stretto.com\/celsius\/\"><i>debtor filings<\/i><\/a><i>, PDF; <a href=\"https:\/\/cases.stretto.com\/public\/x191\/11749\/PLEADINGS\/1174907142280000000096.pdf\">Mashinsky declaration<\/a>, PDF<\/i>]<\/p>\n<p>Alvarez &amp; Marsal, who are best known for unwinding Lehman Brothers after the 2008 financial crisis, are Celsius\u2019s restructuring advisers. [<a href=\"https:\/\/www.ft.com\/content\/8d6dee7d-2cc9-4663-a0a2-e469686baca5\"><i>FT<\/i><\/a><i>, paywalled<\/i>]<\/p>\n<p>What\u2019s Celsius\u2019 big plan to recover in Chapter 11? Bitcoin mining! They\u2019ll mine their way out! Bitcoins for everyone! Yes, that\u2019s the actual plan.<\/p>\n<p>In the declaration from Alex Mashinsky, Celsius has a $1.2 billion hole in its balance sheet. And Celsius\u2019 liabilities are real \u2014 but their assets are fake.<\/p>\n<p>Cryptos aren\u2019t money, and mark-to-market values in dollars are not realisable in practice. Celsius states these are \u201cnon-GAAP\u201d figures \u2014 not in accordance with Generally Accepted Accounting Principles, the standard in the US \u2014 which means they plucked some made-up crypto numbers out of the air with a thin justification.<\/p>\n<p>$600 million of Celsius\u2019 stated assets are their own CEL token, which is worthless except to pay their $210 million of debt that\u2019s denominated in CEL. That \u201c$600 million\u201d is also based on the <i>pre-crash<\/i> price of CEL \u2014 that\u2019d be somewhere under \u201c$200 million\u201d total now, though of course that\u2019s not in any way realizable as dollars.<\/p>\n<p>Celsius has $467 million in ETH, tied up in Staked ETH \u2014 a bet on the future launch of the Ethereum 2 proof-of-stake network. StETH is illiquid even by crypto standards, but currently generates 5% annual interest.<\/p>\n<p>Other assets include a stated $620 million in crypto-denominated loans to other entities. That\u2019s $930 million in loans, and they\u2019ve assumed $310 million of these may go bad. No basis for this is stated, it\u2019s just there.<\/p>\n<p>Celsius also borrowed from an unnamed \u201cprivate lending platform,\u201d putting up collateral for the loan. Celsius attempted to repay the loan in July 2021 \u2014 but it turned out the lender had lent out Celsius\u2019 collateral! Celsius now has \u201can approximately $509 million uncollateralized claim against this party\u201d as one of its assets. <b>Update:<\/b> the lender was EquitiesFirst, whose main business is lending executives cash secured against their company stock holdings. [<i><a href=\"https:\/\/www.ft.com\/content\/70bd513e-8a10-4c96-b7e2-c43dea8df554\">FT<\/a>, paywalled<\/i>]<\/p>\n<p>Celsius values its bitcoin mining operation at $720 million, which might be plausible if bitcoin hadn\u2019t recently plummeted in both price and trading volume.<\/p>\n<p>The company\u2019s current burn rate is <i>$16 million<\/i> a month on payroll, mostly for the executives. Bankruptcy lawyers and advisors are extra on top of that.<\/p>\n<p>Celsius\u2019 largest creditor, at $81.1 million owed, is Pharos (Lantern Ventures), whose founder Tara Mac Aulay is an Alameda co-founder and several employees have various ties to Sam Bankman-Fried of Alameda and FTX. Everyone in crypto is in each other\u2019s pockets. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-07-14\/celsius-bankruptcy-filing-shows-long-reach-of-sam-bankman-fried\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>Celsius has reclaimed \u201c$172 million\u201d in crypto collateral from the Aave and Compound DeFi protocols. [<a href=\"https:\/\/www.coindesk.com\/markets\/2022\/07\/11\/celsius-reclaims-172m-collateral-from-aave-compound\/\"><i>Coindesk<\/i><\/a>]<\/p>\n<p>The trustee will be expected to examine all payments to creditors in the preceding 90 days to see if these should have been administered as part of the bankruptcy. If those payments to creditors should have been part of the bankruptcy, then the trustee can claw them back. If an incorrectly-paid creditor says \u201cahaha, blockchain\u201d or similar, then that creditor will be on the hook.<\/p>\n<p>The bankruptcy filings also tell the story of Celsius and Tether. Around late May or early June \u2014 just before withdrawals were stopped \u2014 Tether margin-called Celsius on the 841 million tethers still outstanding on Celsius\u2019 loan from Tether. Celsius liquidated the loan, for a total loss of $97 million. None of this was hinted at in Tether\u2019s odd blog post last week attempting to get out ahead of this bankruptcy filing. [<a href=\"https:\/\/tether.to\/en\/tether-discloses-celsius-loan-liquidation-process\"><i>blog post<\/i><\/a>]<\/p>\n<p>Celsius admits it was already insolvent by late 2021. Despite this, they claim that it was <i>social media<\/i> about UST and luna collapsing that caused investors to panic and withdraw their funds, and that\u2019s why Celsius is bankrupt now. And not that they were already insolvent.<\/p>\n<p>The Financial Times spoke to former Celsius employees at length: [<a href=\"https:\/\/www.ft.com\/content\/4fa06516-119b-4722-946b-944e38b02f45\"><i>FT<\/i><\/a><i>, paywalled, <\/i><a href=\"https:\/\/archive.ph\/fupUJ\"><i>archive<\/i><\/a>]<\/p>\n<ul>\n<li aria-level=\"1\">Mashinsky said that Celsius executives were holding the company\u2019s own CEL token, but they were actually dumping it \u2014 or selling it back to Celsius.<\/li>\n<li aria-level=\"1\">The compliance team warned that employees had invested in new funds without permission or compliance checks, and could move assets from one fund to another without it being apparent to their supervisors, which could allow them to disguise losses.<\/li>\n<li aria-level=\"1\">\u201cThe company may be inflating its representations of AUM and driving up stock price\/token price using false financial information.\u201d<\/li>\n<li aria-level=\"1\">Celsius claimed 1.7 million customers, but the actual number was in the low hundreds of thousands.<\/li>\n<li aria-level=\"1\">Celsius was talking to FTX before it froze withdrawals in June, but FTX pulled out on seeing the $2 billion hole in the accounts.<\/li>\n<li aria-level=\"1\">Celsius moved its headquarters out of the UK to New Jersey after one too many clashes with the FCA: \u201cthe FCA viewed Celsius as a collective investment scheme and therefore should be subject to tougher rules.\u201d So well done, FCA.<\/li>\n<\/ul>\n<p>Matt Levine: \u201c\u2018Ooooooooh we will take your cryptocurrency and give you 18% interest on it by investing it in secret things\u2019! I\u2019m sorry! What do you think that means? \u2018Either the bank is lying or Celsius is lying,\u2019 Celsius Chief Executive Officer Alex Mashinsky <a href=\"https:\/\/archive.ph\/o\/c8fVm\/https:\/\/www.bloomberg.com\/news\/articles\/2022-01-27\/celsius-s-18-yields-on-crypto-are-tempting-and-drawing-scrutiny%23xj4y7vzkg?sref=1kJVNqnU\">once told Bloomberg Businessweek<\/a>, and I am pretty sure that as a matter of formal logic that statement reduces to \u2018lol I\u2019m running a Ponzi.\u2019\u201d [<a href=\"https:\/\/www.bloomberg.com\/opinion\/articles\/2022-07-11\/the-price-of-not-buying-twitter\"><i>Bloomberg<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.ph\/c8fVm#selection-4169.57-4173.108\"><i>archive<\/i><\/a>]<\/p>\n<h3>Voyager<\/h3>\n<p>It\u2019s been two weeks now since Voyager <a href=\"https:\/\/www.prnewswire.com\/news-releases\/voyager-digital-provides-market-update-301579827.html\">froze withdrawals<\/a> on crypto and $350 million in cash held on behalf of customers at Metropolitan Bank. Voyager filed for bankruptcy on July 5, after 3AC defaulted on $650 million in loans.<\/p>\n<p>Now it has an update on the recovery plan. Voyager say they are working on restoring access to the dollars, \u201cwhich belongs to customers.\u201d [<a href=\"https:\/\/twitter.com\/investvoyager\/status\/1546509898388832258\"><i>Twitter thread<\/i><\/a>; <a href=\"https:\/\/www.investvoyager.com\/blog\/update-on-customer-assets\/\"><i>blog post<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.ph\/QLmBT\"><i>archive<\/i><\/a>]<\/p>\n<p>Here\u2019s the PowerPoint that Voyager presented at their first bankruptcy hearing. Remember, a judge has to approve all of this nonsense. Their next court hearing is 4 August. [<a href=\"https:\/\/twitter.com\/petition\/status\/1545426798875480072\"><i>Twitter<\/i><\/a><i>; <\/i><a href=\"https:\/\/cases.stretto.com\/public\/x193\/11753\/CORRESPONDENCE\/1175307132250000000088.pdf\"><i>Voyager FAQ<\/i><\/a>]<\/p>\n<p>Voyager wasn\u2019t a bank, but it operated as one. It took deposits and made loans of those deposits. One problem was that it wasn\u2019t very good at making loans. Lending was a great business for free money (or \u201cmoney\u201d) in the crypto bubble \u2014 but when the bubble collapsed, suddenly lending wasn\u2019t such a great business. Then UST and luna collapsed, and so 3AC collapsed. [<a href=\"https:\/\/www.coindesk.com\/layer2\/2022\/07\/12\/behind-voyagers-fall-crypto-broker-acted-like-a-bank-went-bankrupt\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>Voyager deleted the line from their 2019 blog post <a href=\"https:\/\/amycastor.com\/2022\/07\/02\/who-had-voyager-digital-next-in-the-defi-dead-pool\/\">saying that customer funds were FDIC insured.<\/a> Good thing there weren\u2019t multiple archived copies or anything. [<a href=\"https:\/\/www.vice.com\/en\/article\/7k8vme\/voyager-quietly-deleted-wording-saying-customer-dollars-safe-if-company-fails\"><i>Vice<\/i><\/a>]<\/p>\n<p>Texas and Alabama are investigating Voyager. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-07-08\/voyager-celsius-implosions-spur-expanded-texas-alabama-probes\"><i>Bloomberg<\/i><\/a>, <a href=\"https:\/\/archive.ph\/nHkL5\">archive<\/a>]<\/p>\n<p>To think Voyager was hiring just a month ago. [<a href=\"https:\/\/www.reddit.com\/r\/Buttcoin\/comments\/vxxhnm\/to_think_voyager_was_hiring_27_days_ago\/\"><i>Reddit<\/i><\/a>]<\/p>\n<h3>Other players<\/h3>\n<p>Vauld CFO Jatin Mazalcar has reportedly stepped down after the crypto lender halted withdrawals on 4 July. He only joined in May and left in June. He obviously hadn\u2019t realized what he had joined. Mazalcar is still a consultant, working at arm&#8217;s length. [<a href=\"https:\/\/www.theblock.co\/post\/156870\/vauld-cfo-leaves-struggling-asian-crypto-lender-sources\"><i>The Block<\/i><\/a>]<\/p>\n<p>Vauld is short of $70 million: \u201cthe main contributing factors for the shortfall are mark-to-market losses on bitcoin (BTC), ether (ETH) and Polygon (MATIC) trades as well as exposure to the collapsed algorithmic stablecoin terraUSD (UST).\u201d [<a href=\"https:\/\/www.theblock.co\/post\/156901\/vauld-letter-creditors-shortfall-70-million\"><i>The Block<\/i><\/a>]<\/p>\n<p>BlockFi says it\u2019s unwound its position in Grayscale\u2019s GBTC, and is no longer accepting GBTC as collateral. [<a href=\"https:\/\/www.theblock.co\/post\/157120\/blockfi-will-no-longer-accept-gbtc-as-collateral\"><i>The Block<\/i><\/a>]<\/p>\n<p>Lots of CeFi companies bought into GBTC, which sold shares in a large pile of bitcoins. This was <a href=\"https:\/\/amycastor.com\/2022\/04\/19\/welcome-to-grayscales-hotel-california\/\">a highly profitable trade<\/a> \u2014 for as long as GBTC traded above net asset value. GBTC has been below NAV since early 2021.<\/p>\n<p>Grayscale\u2019s application to convert GBTC into a proper exchange-traded fund was rejected by the SEC on 29 June \u2014 it turns out <a href=\"https:\/\/amycastor.com\/2022\/04\/30\/gbtc-investors-are-spamming-the-sec-%ef%bf%bc\/\">spamming the SEC<\/a> didn\u2019t work after all. Grayscale is appealing the rejection. [<a href=\"https:\/\/www.sec.gov\/rules\/sro\/nysearca\/2022\/34-95180.pdf\"><i>SEC<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/grayscale.com\/wp-content\/uploads\/2022\/06\/DC-Circuit-Petition-for-Review-as-filed.pdf\"><i>Grayscale<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The Naj was, according to Klingon spiritual beliefs, the &quot;dream before dying&quot;.<\/p>\n<p>That&#39;s the most logical explanation.<\/p>\n<p>The other one is that we created a multi-trillion $ financial crash by hedge funds borrowing uninsured retail deposits to buy a receipt for CryptoDickButt #1462 <a href=\"https:\/\/t.co\/oAQvtUztnJ\">https:\/\/t.co\/oAQvtUztnJ<\/a><\/p>\n<p>&mdash; Chris Shaffer (@DrShaffopolis) <a href=\"https:\/\/twitter.com\/DrShaffopolis\/status\/1547353805536301056?ref_src=twsrc%5Etfw\">July 13, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Look, just because:<\/p>\n<p>\u2022 Ethereum is down 66% from its highs<br \/>\u2022 All of DeFi \u201cyield\u201d ended up being a Ponzi scheme<br \/>\u2022 NFT \u201cart\u201d ultimately was just speculation<br \/>\u2022 The biggest real world use-case of crypto is *still* buying cocaine online<\/p>\n<p>Doesn\u2019t mean that web3 isn\u2019t gonna happen<\/p>\n<p>&mdash; Nikita Bier (@nikitabier) <a href=\"https:\/\/twitter.com\/nikitabier\/status\/1535688312156848128?ref_src=twsrc%5Etfw\">June 11, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<br><br><div align=\"center\"><p><a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\"><img src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/10\/become_a_patron_button.svg\" alt=\"Become a Patron!\" title=\"Become a Patron!\" width=217 height=51><\/a><br><p style=\"align:center;\" class=\"patreon-badge\"><i>Your subscriptions keep this site going. <a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\">Sign up today!<\/a><\/i><\/p><\/div>","protected":false},"excerpt":{"rendered":"<p>&#8220;I used to be an investor like you, until I took three arrows to the knee.\u201d<\/p>\n","protected":false},"author":1,"featured_media":23416,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[3016,3091,3077,3085,2379,2653,2493,3086,1795,3094,3063,916,3080,1668,3083,1552,3095,1798,3093,1799,3092,3084,3051,3089,3076,3079,2020,3088,3081,3078,3082,3087,3050,3090,3061,39,551,3072,2697],"class_list":["post-23415","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised","tag-3ac","tag-aave","tag-advocatus","tag-akin-gump","tag-alabama","tag-alameda","tag-alex-mashinsky","tag-alvarez-marsal","tag-blockfi","tag-cefi","tag-cel","tag-celsius","tag-christopher-farmer","tag-compound","tag-cryptodickbutt","tag-defi","tag-equitiesfirst","tag-ftx","tag-gbtc","tag-grayscale","tag-jatin-mazalcar","tag-kirkland-ellis","tag-kyle-davies","tag-lantern-ventures","tag-latham-and-watkins","tag-martin-glenn","tag-nft","tag-pharos","tag-russell-crumpler","tag-solitaire","tag-starkware","tag-steth","tag-su-zhu","tag-tara-mac-aulay","tag-teneo","tag-tether","tag-texas","tag-vauld","tag-voyager-digital"],"jetpack_featured_media_url":"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2022\/07\/cryptodickbutt1462.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/23415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=23415"}],"version-history":[{"count":41,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/23415\/revisions"}],"predecessor-version":[{"id":23458,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/23415\/revisions\/23458"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media\/23416"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=23415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=23415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=23415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}