CoinFLEX files for restructuring

The cryptocurrency exchange CoinFLEX announced they had filed for restructuring, a move that probably didn't surprise too many people after they stopped customer withdrawals in June, sued Roger Ver over $84 million they claimed he owed them in July, and then significantly cut staff in order to try to massively reduce their costs.

As tends to happen with insolvent exchanges, they are hoping to "compensate" their depositors with a mix of CoinFLEX-issued tokens and equity, rather than actual money or more liquid, established cryptocurrencies.

Nuri crypto exchange files for insolvency

The German cryptocurrency exchange Nuri, formerly known as Bitwala, filed for insolvency. Interestingly, they did not stop customer withdrawals—as have many exchanges who later announced they were insolvent—allowing its existing users to continue to withdraw funds and otherwise use their services.

Their announcement began by saying, "We would like to inform you about an important development that does not affect our services, funds or investments with Nuri," and throughout the post they stressed that customer funds were safe.

Nuri blamed the insolvency on everything from "the ongoing after-effects of the Corona pandemic" to "the economic and political uncertainties in the markets after Russia's invasion of Ukraine" to the more recent crypto bear market.

Hodlnaut halts withdrawals

Crypto lending firm Hodlnaut announced they would be suspending withdrawals "due to recent market conditions". They also announced they would be withdrawing their license application with the Monetary Authority of Singapore, and that "Hodlnaut is therefore no longer providing regulated digital payment token (DPT) services, ie our token swap feature. For the avoidance of doubt, Hodlnaut will also cease all borrowing and lending services."

In an FAQ attached to the announcement, Hodlnaut told users that "it will not be a short process" to re-enable withdrawals and token swaps.

Players in the National Women's Soccer League may be "out money" after Voyager bankruptcy

Half of the money in a large deal between the crypto platform Voyager Digital and the National Women's Soccer League was supposed to be distributed to players in cryptocurrency accounts. According to a press release from Voyager, this was intended to "provide NWSL players with financial education on crypto, including key lessons and tools, to help develop long-term financial growth opportunities for players potentially well after their competitive playing careers have ended."

Those players have certainly learned something about crypto, as the league informed them that they're not likely to get the funds they were promised after Voyager Digital filed for bankruptcy in early July.

CoinFLEX cuts "significant number" of staff

CoinFLEX, a yield farming platform that stopped withdrawals in late June, announced they had made major staff cuts to reduce their cost base by 50–60%. "The intention is to remain right-sized for any entity considering a potential acquisition of or partnership opportunity with CoinFLEX," they wrote in a blog post.

Restructuring plans reveal Babel Finance's $225 million losses during crypto market dip

Babel Finance, a crypto lender that suspended withdrawals in mid June, sustained "massive losses" thanks to its proprietary trading desk, which was trading with customer funds. According to a restructuring plan viewed by Bloomberg, Babel's prop desk lost around 8,000 BTC and 56,000 ETH, valued at around $225 million at the time of the loss. The trading team was not using risk controls, and their unhedged position led to forced liquidations that made Babel's lending and trading departments unable to meet its margin calls from counterparties like Genesis and Zipmex.

Celsius customers send letters to the judge in the bankruptcy case

Correspondences of my email sent to support on 15 Jun 2022:  To: support@celsius.network Cc: ceo@celsius.network  Dear Alex and Celcius support, I am writing this email to ask for your special consideration to allow me to make a small withdrawal on my BTC held in Celcius. I understand that Celsius made the decision to pause withdrawals in a volatile market condition, but do hope that you review my case and give me special permission.  I am 5.5 months pregnant with my third child. I am expecting to give birth in early October and I do need the fund to pay for the hospital, doctor and baby items such as cot, clothes, nappies etc. I also need the fund to pay for school fees for my two other schools aged children.  I have attached a recent scan of my baby and a letter from my obstetrician confirming my pregnancy and planning for admission into the hospital.  Scan of my baby that am carrying: [ultrasound photo of a fetus]Email to Alex Mashinsky and Celsius support (attribution)
Celsius customers have begun to send letters to the judge presiding over Celsius Network's bankruptcy case in the Southern District of New York. More than fifty letters have been entered into the docket since July 15, and new letters are continually being added.

Many customers write of being convinced by Alex Mashinsky personally, particularly in his weekly "AMA"s where he regularly claimed that Celsius was a safe platform with substantial reserves that could cover any potential losses. Mashinsky often denigrated traditional banks, referring to Celsius as a better and safer option.

Some of the letters are particularly heartbreaking, with customers referring to suicidal ideation or saying that they've been too ashamed to share the news of their financial losses with their family. One woman included a copy of an email she sent to Mashinsky and Celsius support, pleading for them to allow her access to her crypto, and including an ultrasound photo of a baby. "I do need the fund to pay for the hospital, doctor and baby items such as cot, clothes, nappies etc. I also need the fund to pay for school fees for my two other school aged children," she wrote.

Korean authorities raid seven cryptocurrency exchanges in relation to Terra investigation

Korean police cars parked outside an office building at nighttime. A lit "Upbit" sign is visible.Korean police executing one of the raids (attribution)
Prosecutors working on the fraud case around the May Terra/Luna collapse raided seven cryptocurrency exchanges in South Korea including Bithumb, Upbit, and Coinone. They also raided eight other offices and residences in connection to the investigation. The investigators are reportedly looking for evidence to determine whether Terra founder and CEO Do Kwon may have intentionally spurred the collapse of the ecosystem.

Bexplus crypto exchange closes, gives users only 24 hours to withdraw funds

The cryptocurrency exchange Bexplus announced that "due to force majeure, Bexplus will stop service from now on". Users were told to close their open positions and withdraw any funds within only a 24-hour period, before positions would be automatically closed and the withdrawal service would become unavailable.

Only four days prior, on July 14, Bexplus had published a press release offering "rewards worth up to $5,000 to new users who sign up and make their first deposit". The project also promised its users up to 21% interest on bitcoin kept with the exchange. Bexplus had also promised a 100% match on deposits to the platform, up to 10 BTC (currently priced at $235,550).

BlockFi offers employee buyouts to further reduce headcount one month after cutting 20% of staff

The cryptocurrency lender BlockFi is reportedly offering employees buyouts—sorry, a "voluntary separation program"—in an effort to reduce their headcount even further. Those employees receive 10 weeks of paid leave, 10 weeks of continued health insurance, and unemployment eligibility if they resign.

The move came only a month after BlockFi laid off 20% of their employees, or around 170 people. The company appears to be struggling to stay afloat, soliciting $400 million in loans from Sam Bankman-Fried's FTX crypto exchange and signing a deal with FTX that gives the exchange the opportunity to acquire them.

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