The instability evidenced during this year 2022 by cryptocurrencies has led many companies dedicated to crypto loans and others dedicated to this sector to freeze their operations, and some even declare bankruptcy.
This business scenario did not contribute anything to the situation that cryptocurrencies had been going through; on the contrary, it generated more complications and controversy regarding the functionality of digital currencies and their actual value. More information is available on https://bitcoinaussiesystem.app/.
The drastic measures taken by the business people who lead these companies to avoid higher losses and the protection of their users are today at a crossroads about the funds that were protected and the accounts they must render to their clients.
Companies with lines of credit in cryptocurrencies
As they exist in the traditional financial market, these companies, platforms, or Defi for buying, selling, and lending cryptocurrencies work similarly, only that the funds usually lent are in digital currencies.
Some of the most recognized companies in the crypto sector are Three Arrows, Celsius, Babel or Vauld, and Coinbase.
These companies usually establish lines of credit in both Fiat and cryptocurrencies for large amounts, turning these companies into whales or investors with large numbers of Bitcoin and other crypto units on their balance sheets.
The situation began to get critical when the fall of the Terra digital currency arose, which added to the liquidity problems due to the excessive sales of many users due to the drop in prices (not only of Terra but of the entire system of coins) led companies not to be able to meet deadlines.
This scenario and an external economic and financial situation that has undoubtedly affected the entire crypto ecosystem, leading these companies to limit their capital having to declare bankruptcy.
The situation may improve, but that is where everything will depend on the clauses and contracts previously established by the participants if a critical problem like this arises and that nobody expected could happen so drastically.
The safest option is to lose money
In the United States, when there is a complicated economic and financial panorama where many companies may be affected, they apply the regulations known as the Bankruptcy Law, where the main objective is to paralyze operations for a while for the financial recovery of a company.
Applying this law offers the opportunity to rethink the financial situation of the companies and to have a reasonable time where they must organize themselves and prepare a plan for the future to meet the obligations with third parties.
It is there where more than one is in a state of alarm since the law provides that if the company has to respond to the account holders, they may not do so in proportion to the balance they had deposited in said companies.
They can also offer their creditors the possibility of canceling the commitments in cryptocurrencies, shares, or any other instrument they deem appropriate.
Users can claim their capital after completing the conciliation and fraud prevention process.
Bankrupt or just a hoax
It is a critical situation that affects not only the crypto companies’ owners but also all the users and beneficiaries who at the time believed in their company name and project.
It is now when litigation and legal actions begin when the parties’ interests are known.
The fall of cryptocurrencies wreaked havoc at all levels to the point that these companies had to expose some of the previously established clauses if a bankruptcy situation was considered in the specific case of Celsius, the clients. Not the platform owns the bitcoins in custody.
This outstanding company adds to its commitments with its clients by around 4.5 million dollars.
The extreme conditions that the crypto market has gone through have not allowed companies to advance; on the contrary, they have reached the point of being strangled by finances, and where their outputs are more remarkable than income, managing to pause operations, of course, it was expected to generate more instability in the market.
These companies intend to stabilize their finances and create a new restructuring plan where the funds and their commitments are stabilized, avoiding leaving more than one of their clients without capital in cryptocurrencies.