Explore the List of Crypto Bankruptcies in 2023
2022 was a tough year for the crypto industry, with the collapse of Terraform Labs and FTX leading to a harsh crypto winter. The effects of these collapses carried over into 2023, resulting in bankruptcies, layoffs, and shutdowns across the market.
In this article, we’ll take a look at some notable crypto bankruptcies and exchange failures that occurred in 2023.
Genesis: A Prominent Crypto Lending Subsidiary
Genesis, a crypto lending subsidiary of Digital Currency Group, declared bankruptcy in 2023. The company faced financial distress after suffering significant loan losses and being impacted by the collapse of FTX and Alameda Research.
Core Scientific: Declining Bitcoin Prices and Unpaid Debt
Core Scientific, a leading US-based crypto mining company, filed for bankruptcy due to declining Bitcoin prices, escalating energy costs, and unpaid debt from Celsius Network. However, the company negotiated an agreement with shareholders that signaled a potential path to recovery.
Babel Finance: Troubled Waters for a Hong Kong-based Crypto Lender
Babel Finance faced challenges after suspending client withdrawals and incurring substantial losses through proprietary trading. While not officially bankrupt, the company required extended creditor protection due to its financial difficulties.
Crypto Exchange Bankruptcies in 2023
Crypto exchanges faced regulatory scrutiny in 2023. KuCoin exited the New York market due to regulatory challenges, while Binance settled criminal charges with the DOJ. Several exchanges also shut down their operations:
Bittrex Global: Cessation of Operations
Bittrex Global announced the cessation of its operations, following the shutdown of its US arm. The exchange did not disclose specific reasons for this decision.
Txbit: Shutdown Due to Regulatory Conditions and Market Shifts
Netherlands-based cryptocurrency exchange Txbit closed its doors due to uncertain regulatory conditions and adverse market shifts that made its business model unprofitable.
Bitfront: Ceasing Operations Despite Backing from Line Corp
Bitfront, a US-based crypto exchange backed by Line Corp, decided to cease operations. The exchange cited a strategic shift towards growing the LINE blockchain ecosystem as the reason for its decision.
Major Crypto Layoffs in 2023
Blockchain.com: Downsizing Amidst Market Downturn
Crypto brokerage Blockchain.com announced significant layoffs in response to the market downturn. However, the company later announced plans to increase its workforce amid expansion to Nigeria and Turkey.
Coinbase: Restructuring and Cost-Cutting Measures
Coinbase underwent a significant restructuring, including laying off around 20% of its staff. The exchange faced challenges in turning a profit and paid a penalty to settle accusations of insufficient background checks on customer accounts.
Crypto.com: Multiple Rounds of Layoffs
Crypto.com experienced significant layoffs within six months, attributed in part to the aftermath of the FTX collapse and a misstep involving a large transaction.
Digital Currency Group: Closure of Wealth-Management Division
Digital Currency Group closed its wealth-management division as part of a broader reassessment of its holdings. The company also explored options for CoinDesk, including a potential sale.
Frequently Asked Questions
If you’re wondering what happens when a crypto exchange goes bankrupt, it can put customer assets at risk and make it difficult to withdraw funds. In 2023, notable crypto exchanges that collapsed include Bittrex Global, Txbit, and Bitfront. Genesis, Core Scientific, and Babel Finance were among the major crypto entities that went bankrupt.
Hot Take: The Fallout of Crypto Bankruptcies in 2023
The year 2023 witnessed the aftermath of the harsh crypto winter in 2022, with bankruptcies and failures plaguing the industry. Major players like Genesis and Core Scientific faced financial distress, while exchanges like Bittrex Global and Txbit shut down their operations. These events highlight the challenges faced by the crypto industry and the need for companies to adapt to market and regulatory pressures. As we move forward, it will be crucial for the industry to learn from these experiences and build a more resilient ecosystem.
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