**Crypto Bank Runs in 2022: A Closer Look at the Catalysts** 💥
Shh, let’s talk about the wild ride of the 2022 crypto bank runs – all triggered by the stumble of major players in the crypto world. The latest research report by the Federal Reserve Bank of Chicago has delved deep into the factors that fueled last year’s crypto crisis. Here are the juicy bits from the report:
👉 The withdrawal spree by big-shot crypto whales and heavy hitters on centralized exchanges, especially notable institutional accounts, set off a liquidity crisis that snowballed into a full-blown bank run.
🙊 The initial shockwave arrived with the Terra collapse, sending customers of various crypto lenders with ties to the Terra ecosystem into a frenzy. Celsius and Voyager Digital found themselves bleeding out funds as customers pulled out 20% and 14%, respectively, in just 11 days post-collapse. To add to the drama, Celsius had sunk almost a billion dollars into Terra’s ill-fated stablecoin venture.
🙃 The next big bang came crashing down in July 2022 with Three Arrows Capital’s tragic downfall. Celsius and Voyager Digital endured another wave of outflows, losing 10% and a whopping 39%, respectively, due to their links with the bankrupt 3AC.
😱 3AC set off a chain reaction of chaos in the crypto realm, with multiple firms extending colossal loans in crypto assets to the hedge fund. Genesis Capital, for one, lent a jaw-dropping $2.4 billion to 3AC; while BlockFi and Voyager Digital chipped in with $1 billion and $350 million plus 15,250 Bitcoins (equivalent to around $328 million) respectively. Meanwhile, Celsius was in for about $75 million.
Hold tight, folks. The crypto rollercoaster never fails to keep us on our toes! 🚀🎢