In a span of less than 12 months, nearly all of the biggest of those companies have failed spectacularly. Last week, Genesis filed Chapter 11, joining Voyager Digital, Celsius, and BlockFi on the list of companies that have either filed for bankruptcy protection or gone out of business.
This subset of the industry grew as cryptocurrency enthusiasts were looking to build their own parallel world in finance untethered to traditional banking and government-issued currencies. But lacking safeguards, and without a government backstop, these companies failed in a domino-like fashion. What started with one crypto company collapsing in May spilled over onto one crypto lending firm and then the next.
Further, government regulators started clamping down on crypto lending companies’ ability to advertise their services, saying that their products should have been regulated by securities regulators.
The collapse is reminiscent of the 2008 financial crisis but on a much smaller scale. There are no worries that the collapse of these crypto firms will impact the broader economy.
This story is from the January 28, 2023 edition of Techlife News.
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This story is from the January 28, 2023 edition of Techlife News.
Subscribe to Magzter GOLD to access thousands of curated premium stories, and 8,000+ magazines and newspapers.
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