The cryptocurrency market continues with the pessimistic outlook with which it started the second quarter of the year and which has been carried over to the month of July. After last week’s falls, which saw the price of bitcoin (BTC) succumb to selling pressure and drop to $18,700 , according to data from CoinMarketCap, the digital currency is held at $19,000, weighed down by bad news from the sector, with other crypto-asset loan companies and funds on the brink of the abyss. Specifically, Voyager Digital has suspended withdrawals, trading and deposits on its platform , due to difficult market conditions.
The company has announced that it is exploring strategic alternatives to preserve the value of its platform. The move comes days after the company issued a notice of default to beleaguered hedge fund Three Arrows Capital (3AC) for failing to make required payments on a loan. The company is seeking protection from creditors in the United States under Chapter 15 of the US Bankruptcy Code, which allows foreign debtors to protect their assets in the country.
This case adds to a list of companies related to crypto assets that have already gone bankrupt or are about to do so. The thread of this story goes back to May, when the algorithmic stablecoin terraUSD and its sister coin LUNA crashed, losing $40 billion in value. That sent reverberations throughout the crypto space and made some companies insurmountable, like Three Arrows Capital, which had exposure to LUNA.
Last Thursday, this fund saw the final nail hammered into its coffin when a court in the British Virgin Islands on Thursday ordered its liquidation after it defaulted on loans. The cryptocurrency hedge fund failed to make payments on its 15,250 BTC and 350 million USDC loan from Voyager Digital . 3AC also borrowed some $80 million from lender BlockFi, and its positions were liquidated after failing to meet margin calls.
But it hasn’t all been bad news for digital assets. The European Union (EU) last week passed legislation to regulate crypto assets and services in its 27 nations . Policies require crypto issuers to register with authorities and publish white papers, i.e. documents detailing the technology and purpose of the projects. The new law, dubbed Mercados de Cryptoassets (MiCA), also ensures that exchanges hold stablecoin reserves to prevent massive withdrawals.
Although the industry suffers from regulations and compliance, the new rules could provide much-needed security and confidence.