The failure of several ecosystem goliaths in 2022 was what sparked the crypto bank runs, which resulted in large withdrawals and a liquidity shortage. Several significant factors and catalysts that accelerated the crisis were identified in a recent research report from the Federal Reserve Bank of Chicago (FRBC). These included the collapse of Terra and the fall of Three Arrows Capital in July 2022. The most significant information in this text is that BlockFi provided $1 billion, Voyager Digital provided $350 million and 15,250 Bitcoin, Celsius provided $75 million, and Celsius and Voyager Digital experienced outflows of 10% and 39% as a result of their exposure to the bankrupt 3AC.
Additionally, over 37% of customer funds were lost during the FTX collapse in November 2022, with large accounts with investments totaling over $500,000 losing money at the fastest rates. The real culprits were cryptocurrency lending companies that promised high returns through risky investments but provided neither security nor failure insurance.
