Winter is Here in The World of Digital Assets
The cryptocurrency bear market has brought about the fall of several industry unicorns. A few days ago, Amber Group, valued at $3 billion, was revealed to have emptied its domestic offices and disappeared with clients' funds.
Amber Group was one of the victims of the FTX crash, having been an active trading participant in the FTX, with “less than 10% of total trading funds tied up in the FTX exchange”. And previously, BlockFi, a cryptocurrency lender affected by the FTX collapse, filed for bankruptcy due to insolvency.
The domino effect is difficult to stop once triggered. According to MetaverseNEW, nine unicorns in the crypto industry have filed for bankruptcy this year. The highest valuation is $32 billion FTX, and the latest to file for bankruptcy is the exchange Digital Surge.
On December 6, an analyst from Lookonchain said on social media that cryptocurrency trading and asset management company Amber Group appeared to be on the verge of bankruptcy, with only $9.46 million in assets between the six wallets it owns.
The bankruptcy rumours came after some investors took to social media to ask Amber Group managing partner Annabelle Huang about the safety of Amber Group's funds. The latter did not directly clarify the financial situation, replying, “We continue to do business as usual, and if you have any concerns, withdrawals are open as usual.”
On December 7, according to the?news?from the cryptocurrency circle's self-publisher Deep Tide TechFlow, several former Amber employees who were laid off in November complained that they did not receive any layoff compensation which was promised to be paid in early December. What's even more worrying is that they were unable to contact the executives and can only get ambiguous answers from HR. All offices in China were also emptied thoroughly on December 5.
Amber Group then released a statement clarifying that its domestic offices are still operating normally but when asked about its ShenZhens technical department, no further details were provided.
Subsequently, Amber Group also officially announced that it was business as usual for Amber Group and WhaleFinApp and explained that constant changes were adopted to improve business strategies, products, and internal functions.
In response to questions from Lookonchains analyst about its financial aspects, the aforementioned Amber Group source told reporters that as one of the largest market makers in the industry, there are some assets on centralized exchanges.
“This analysis is very one-sided, and the screenshot only shows the assets of one or two wallet addresses on our chain.” The person said.
However, Amber Group said to the public after the FTX crash that it had no exposure to Alameda or FTT but that it had been an active trading participant in FTX, with less than 10 per cent of its total trading?capital?tied up in the FTX exchange. “While we have significantly reduced our exposure in one week, we still have outstanding withdrawals but it does not pose a threat to our business operations or liquidity.” Amber Group stressed.
In the latest news, Amber Group said it had raised about $50 million from a new sovereign fund in a deal to be announced in January, which is only half of its $100 million financing plan, the Financial Times reported on December 9.
Amber Group announced in February 22 this year that it had closed a $200 million Series B+ round of funding at a $3 billion valuation, led by Temasek with existing shareholders, including Sequoia China, Pantera Capital, Tiger Global, Management, Tru Arrow Partners and Coinbase Ventures. Amber Group has raised a total of $328 million in funding.
Domino Effect
Based on public information statistics, it is seen that 9 crypto unicorns have filed for bankruptcy this year. The largest bankrupt institution is FTX, the world's second-largest cryptocurrency exchange, which once had a market cap of $32 billion. Among the nine bankrupt unicorns, are three cryptocurrency lending providers, two exchanges, two cryptocurrency service providers, and one hedge fund and one bitcoin trader.
“In fact, the crypto industry is not as healthy as it seems to be on the outside, and it has accumulated a lot of potential vulnerabilities in its rapid development. These loopholes have created one big mine after another when they have been penetrated”, said financial technology expert Kai-Long Tsai to MetaverseNEW.
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Cryptocurrency lender BlockFi filed for bankruptcy just about two weeks after FTX. According to bankruptcy documents filed by the company, its liabilities are approaching $10 billion.
BlockFi is inextricably linked to FTX, relying on $400 million in the credit given by FTX to keep it afloat after rivals Voyager Digital Ltd and Celsius Network went bust in the market turmoil earlier in 2022.
Last August, BlockFi closed a $500 million Series E round of funding, rising to a $3.8 billion valuation after the investment, and it is backed by equity investors including Tiger Global, Jump Capital, Winklevoss Capital, Peter Thiel,?Galaxy?Digital, Northwestern University Alumni Venture Capital Fund Purple Arch Ventures, Paradigm, Morgan Creek Digital and?CMS?Holdings.
Another crypto lender, Celsius Network, filed for bankruptcy this July after the collapse of cryptocurrencies Terra and Luna. It closed a $750 million funding round last October.
Although there is no absolute zero-risk trading or investment, staying informed and up-to-date to (little) updates within the markets could provide insights in making sound financial decisions.
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