The 2022 version of crypto winter has been unlike anything we’ve seen before. As I warned last month, the meltdown of the Terra ecosystem didn’t end with Luna Classic (LUNC) hitting zero. The biggest threat was contagion. As the dust began to settle, we finally got a glimpse of who was left holding the bag. Crypto lender Celsius and Singapore-based venture firm Three Arrows Capital suffered heavy losses during the debacle. These firms, once a staple of the budding crypto industry, now risk demise following weeks of massive selloffs in the market. Celsius reportedly seeks advice from lawyers on restructuring …

As fears surrounding the Coinbase exchange run wild, Paul Grewal, the chief legal officer of Coinbase, assured customers that their funds are safe within the exchange. In an SEC disclosure made by Coinbase back in May, certain parts of the document mentioned that in the case of bankruptcy, crypto-assets held in custody on behalf of its customers may be "subject to bankruptcy proceedings" and that customers may become "unsecured creditors" in the process. The disclosure was thrust into the limelight right after Coinbase reported its losses in the first quarter of 2022 amounting to $430 million and showed a decrease …

The price of Coinbase’s junk bonds are tanking amid an underwhelming performance in Q1 and fears over what could happen in the event of a bankruptcy. According to bond trading data from Trace Bonds, both of Coinbase’s junk bond offerings have dropped roughly 17% and 5.2% since its Q1 report on Tuesday to sit at $63 and $62.31 at the time of writing. Overall, they are down 20% and 19% apiece since the start of this month. 10y coinbase bonds trading at 63 cents on the dollar pic.twitter.com/fqmKmiXk5E — state (@statelayer) May 12, 2022 Junk bonds are a form of …

Bankrupt cryptocurrency lending platform Cred Inc is believed to have unwittingly appointed a prison escapee as its Chief Financial Officer. A report filed by examiner Robert Stark of Brown Rudnick LLP on March 8 asserts that former Cred CFO James Alexander has been identified by U.K. authorities as a financial fugitive who had been sentenced to more than three years imprisonment in December 2007. Stark said: "At the time of his incarceration, there was a prison break at this facility. Mr. Alexander has been identified by the UK government as a fugitive." Stark was appointed by Judge John Dorsey in …

United States Bankruptcy Judge John Dorsey has denied an emergency motion filed by 15 customers of the embattled crypto lending firm Cred Inc. to freeze crypto assets held by the firm on exchanges amid its Chapter 11 bankruptcy proceedings. More than a dozen of Cred’s creditors the emergency motion on Nov. 23, seeking to compel 21 cryptocurrency exchanges to freeze assets held by Cred on their respective platforms, including five U.S.-based exchanges. During a Nov. 25 hearing, Dorsey asserted that he could not act on the motion without evidence surrounding the status and ownership of the crypto assets in question, …

United States-based cryptocurrency lending service Cred filed for Chapter 11 bankruptcy protection on Saturday, leaving many customers searching for solutions to get their funds. According to court documents, the legal team for Cred CEO Daniel Schatt filed bankruptcy papers for the company in the District of Delaware on Nov. 7. Cred listed its estimated assets at between $50-100 million and its estimated liabilities between $100-500 million. In an official statement, the company said it had filed for Chapter 11 in an attempt “to maximize the value of its platform for its creditors.” The bankruptcy filing comes following an Oct. 28 …

A recent paper from academics at Leiden Law School suggests that if a crypto exchange or crypto custodian goes bankrupt, investors could well lose control over their stored coins. This happened in Japan’s Mt. Gox exchange collapse, and more recently with the failure of Italy’s BitGrail exchange. Thus, it could happen again. Indeed, the paper implies that even users of United States-based exchange Coinbase could have problems reclaiming their crypto in the event of insolvency — because Coinbase doesn’t segregate blockchain addresses. So, the question still stands: “Is there a risk you could lose your Bitcoin” if an exchange or …

A paper recently published by the Law Faculty of the University of Oxford examines the legal risks of depositing cryptocurrency with custodians in the event of insolvency. The paper, featured in a June 1 blog-post by the faculty, also suggests ways that regulation and practice can help to mitigate this risk. Disintermediation failed Cryptocurrencies were initially created as a way to be free from the interference of governments, banks and other intermediaries. However, the reality is that a large proportion of Bitcoin (BTC) and other cryptocurrencies is currently held through custodians such as exchanges, rather than by investors themselves. This …

The FCoin exchange has officially announced that it will relaunch operations. A committee was formed after the exchange announced insolvency, promising to eventually return users’ funds. The exchange’s existing team will resume the operation of the FCoin and FMex websites, handing them over to an “interim committee” led by community representatives. The announcement was made on Feb. 27 on FCoin’s support page. The community will draft a compensation plan for the users affected by the insolvency. No details are available, with the announcement suggesting that it could be a mix of creditor’s rights or company equity. Finally, after the payment …

Less than two years after bursting onto the scene, Chinese crypto exchange FCoin has shut down its operations. The platform, founded by Zhang Jian, also says it may be unable to pay the 7,000 to 13,000 Bitcoin (BTC) — about $67 million to $125 million — that is owed to its customers. Jian, the former chief technology officer of Huobi, tried to explain the reasons for the platform’s insolvency, identifying poor auditing practices. Crypto pundits, however, say there is a more sinister aspect to FCoin’s demise — one that involves a cleverly orchestrated exit scam by the platform’s hierarchy. An …

Canada-based cryptocurrency mining company Great North Data has submitted a bankruptcy filing, purportedly due to insolvency. As the Canadian Broadcasting Corporation reported on Dec. 4, Great North Data — which operated crypto mining facilities in Labrador City and Happy Valley-Goose Bay — filed bankruptcy documents in late November, listing CA$13.2 million ($10 million) in liabilities, while having only CA$4.6 ($3.5 million) million in assets. Liabilities to the state With that, Great North Data reportedly owes CA$313,718 ($238,080) to the Newfoundland and Labrador government's Business Investment Corporation, which the company secured for building, land, machinery and equipment. The Atlantic Canada Opportunities …

Mt. Gox founder Jed McCaleb is being sued by two traders who used the doomed exchange, court documents filed on May 19 show. Joseph Jones and Peter Steinmetz have accused the ex-CEO of fraudulently and negligently misrepresenting the exchange. The pair also allege that McCaleb was aware of “serious security risks” back in late 2010 or early 2011 — more than three years before 850,000 bitcoin (BTC) was stolen in an audacious hack. Their complaint adds: “Rather than secure the exchange, McCaleb sold a large portion of his interest in the then sole proprietorship, and provided avenues to the purchases …