Seeking attention
Crypto proponents have been struggling for years to take their emerging technology mainstream. Now, the crypto sector is the centre of attention, for all the wrong reasons.
(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)
This week, the controversial Celsius Network crypto lending company that froze all user transfers and withdrawals, filed for bankruptcy protection in the USA. A legal document showed that the company had a deficit of close to $1.2 billion.
The company is also planning to use its $167 million in cash on hand to support some operations while it undergoes financial restructuring.
Celsius stated it had around 1.7 million registered users and $6 billion in assets at the start of this month.
“The onset of the “crypto winter” combined with the well-publicised collapse of Luna and the failure of several crypto funds/exchanges led to growing industry-wide reluctance to do business with companies, such as Celsius, that held crypto assets,” stated a legal document signed by Celsius CEO Alex Mashinsky on Thursday.
Several U.S. state regulators are currently investigating Celsius’ activities, and one regulator had said it believed the platform to be “deeply insolvent.”
Other crypto assets are also in the line of fire. This week, the Financial Stability Board (FSB), an organisation which advises countries on international finance matters, promised to push for the regulation of stablecoins—cryptocurrencies pegged to the value of dollars, pounds, and other assets. A report on possible approaches is currently scheduled for October.
Furthermore, the U.S. Treasury is working on a report for President Joe Biden about the risks and opportunities that digital assets could bring through mass adoption.
All in all, the current crypto meltdown is not the time many advocates would have chosen for international groups and official bodies to start paying closer attention to the sector.
Slashed jobs
The NFT community experienced a shock on Thursday when OpenSea, which claims to be the “first and largest” NFT marketplace, announced it was slashing 20% of its team.
OpenSea’s co-founder and CEO Devin Finzer blamed an “unprecedented combination of crypto winter and broad macroeconomic instability.” However, he stressed that the company had a “very strong” balance sheet.
The move highlights how more and more crypto companies that expanded aggressively last year are unable to keep up the same momentum during the 2022 bear market which saw customers pulling their investments en masse. This triggered liquidity crunches across the industry.
The question now is whether smaller rival NFT marketplaces will follow OpenSea’s footsteps and downsize their staff—or use this time to recruit from a growing pool of crypto professionals desperate for new jobs.
Sideways momentum
With Bitcoin just below $21,000 while Ether was above $1,200 on Friday, not much has changed in terms of price performance in the last few weeks.
Data from the crypto analytics platform Glassnode showed that the amount of Bitcoin held by long-term investors and/or lost by traders has reached a new 19-month-high of 7,376,212.666 BTC. This can hint that traders are waiting out the bear market, or that many have somehow lost access to their assets.
Published - July 16, 2022 12:04 pm IST
