# Bripto bailouts: Emergency Crypto Stabilization Act of 2022

**Published by:** [002α](https://paragraph.com/@002a/)
**Published on:** 2022-06-21
**Categories:** voyager, ftx, alameda research, blockfi, sam bankman-fried, zac prince, three arrows capital, solend, coinflex, celsius, goldman sachs
**URL:** https://paragraph.com/@002a/crypto-bailout

## Content

The high-profile collapse of the Terra ecosystem and subsequent [collapse](https://paragraph.xyz/notes) of hedge fund Three Arrows Capital — together with troubles at Celsius and other CeFi lenders — have spread contagion throughout the wider crypto industry. At the same time, coin and token prices have nuked massively from all-time highs alongside major Fed-fueled declines in traditional markets — causing widespread losses (both realized and unrealized). Retail has — for the time being, at least — exited the game, and general risk-off attitudes are unlikely to bolster the crypto market in the near-term. Crypto is once again in a bear market. Fear, uncertainty and doubt are pervasive. Both BTC and ETH have revisited prices below their last-cycle all-time highs. Entities and major players across the industry are seeing actual threats to their financial well-being. The crypto industry may be experiencing its own over-leveraged financial crisis as customer confidence crumbles and questions are being asked about liquidity and solvency. Obviously, no government bailout is in the cards (though regulation may be) — leaving the industry’s largest players to try and stem the bleeding themselves. ==This article aims to serve as a comprehensive record and examination of proverbial bailouts across the crypto industry.== ## Voyager bailed out by Alameda Research Voyager Digital Ltd. signed a non-binding term sheet with Alameda Research to secure both a cash/USDC-based credit facility for 200 million USD and a 15,000 BTC credit facility. Both credit facilities expire on Dec. 31, 2024 and carry a 5% annual interest rate. * Voyager [blamed](https://www.prnewswire.com/news-releases/voyager-digital-signs-term-sheet-for-us200-million-and-15-000-btc-revolving-line-of-credit-with-alameda-research-301570656.html) "current crypto market conditions" and claimed the loan is meant to help it "better serve and protect its customers." ### Low risk, but haemorrhaging money? Before the loan, rumors were [circulating](https://twitter.com/ASvanevik/status/1538230630026072064) concerning Voyager’s possible insolvency. * Speculation exists that Voyager’s apparent financial issues stem from it [loaning](https://twitter.com/DylanLeClair_/status/1537506934563262466) Three Arrows Capital 320 million USD. * Voyager has [claimed](https://twitter.com/investvoyager/status/1536709196619649024) that it does not engage in DeFi lending activities, algorithmic stablecoin staking/lending, derivative assets or stETH. * It has [referred](https://twitter.com/investvoyager/status/1536709199694024704) to its business practices as "low-risk" and and "straightforward." ## BlockFi bailed out by FTX BlockFi signed a term sheet with FTX to secure a 250 million USD revolving credit facility. * The announcement was made by the BlockFi’s CEO, Zac Prince, who [tweeted](https://twitter.com/BlockFiZac/status/1539216594383028224) that the loan provides the crypto platform "with access to capital that further bolsters out balance sheet and platform strength." * FTX's CEO, Sam Bankman-Fried, [referred](https://twitter.com/SBF_FTX/status/1539268631095152642) to the deal as a capital injection in order to partner with BlockFi and help it "navigate the market from a position of strength." ### Too little, too late? Some in the crypto industry believe the deal still doesn’t make BlockFi tenable. * Supposedly leaked financials via @0xHamz [show](https://twitter.com/0xHamz/status/1539256060225146885) the crypto platform burning some 350 million USD in 2022 with negative gross profit. * Not helping BlockFi’s near-term outlook is the belief that clients’ de-risking is [expected](https://twitter.com/lawmaster/status/1539256586870394889) to hit crypto lending platforms hard in the immediate future. ## Solend walks back whale-wallet takeover After an approved proposal provided Solend Labs with "emergency powers" to take over a whale’s wallet in an attempt to avoid liquidation — a result of SOL’s price decrease — a subsequent proposal passed that invalidated the move. * The takeover was originally attempted to prevent the decentralized lending platform from taking on bad debt and putting strain on the already-strained Solana network. * Following the passing of governance proposal SLND3, a per-account borrow limit of $50M will be [imposed](https://twitter.com/solendprotocol/status/1539397862563295233) on Solend. ### Decentralized finance (when it’s convenient) The whole situation with Solend has highlighted that some decentralized finance protocols are not very decentralized. * Upgradable smart contracts in the DeFi space may be [problematic](https://twitter.com/scott_lew_is/status/1539084602979110913). ## CoinFLEX monetizing 47 million USD IOU After an individual account went into negative equity and couldn’t be automatically liquidated, CoinFLEX [paused](https://coinflex.com/blog/coinflexs-solution-to-resume-withdrawls) user withdrawals. Subsequently, the individual in question apparently pledged "stringent personal guarantees around account equity and margin calls in exchange for not being liquidated." Now, in an attempt to re-enable withdrawals, the self-professed "Home of Crypto Yield" is planning to monetize the individual’s "personal guarantee" by launching a Recovery Value USD token, or rvUSD. CoinFLEX claims there is "significant interest in the terms presented" from "potential large buyers." * The maximum amount of rvUSD being [issued](https://cfv2-media.s3.ap-northeast-1.amazonaws.com/media/pdf/rvUSD_Whitepaper.pdf) is 47 million tokens — implying the problematic loan in question was for 47 million USD and not collateralized. * CoinFLEX is offering a 20% APR paid daily in rvUSD — an interest rate with questionable sustainability. ## Celsius facing bankruptcy as Goldman Sachs looks to buy assets Goldman Sachs is reportedly [trying](https://www.coindesk.com/business/2022/06/24/goldman-sachs-raising-funds-to-buy-celsius-assets-sources/) to raise 2 billion USD in an effort to buy distressed assets from Celsius after the crypto lender tapped restructuring [advisors](https://www.wsj.com/articles/celsius-network-taps-more-advisers-to-prepare-for-potential-bankruptcy-11656088078?mod=Searchresults_pos1&page=1) Alvarez & Marshal and restructuring [attorneys](https://www.wsj.com/articles/crypto-lender-celsius-hires-restructuring-lawyers-after-account-freeze-11655250575) from Akin Gump Strauss Hauer & Feld. * Buying distressed Celsius assets would potentially provide investors with massive discounts on coins and tokens in the event of the latter’s bankruptcy — which seems increasingly likely. :::info This article is a work in progress and will be updated regularly as new and relevant information comes in. ::: \

## Publication Information

- [002α](https://paragraph.com/@002a/): Publication homepage
- [All Posts](https://paragraph.com/@002a/): More posts from this publication
- [RSS Feed](https://api.paragraph.com/blogs/rss/@002a): Subscribe to updates
- [Twitter](https://twitter.com/XBT002): Follow on Twitter

## Optional

- [Collect as NFT](https://paragraph.com/@002a/crypto-bailout): Support the author by collecting this post
- [View Collectors](https://paragraph.com/@002a/crypto-bailout/collectors): See who has collected this post