Are There Bankruptcies in Crypto? Key Examples Explained

The cryptocurrency market, often celebrated for its rapid growth, has also seen spectacular collapses. In 2022, a wave of crypto bankruptcies shook the industry, wiping out billions in investor funds and sparking lawsuits. Companies like FTX, Celsius, and Voyager Digital, once giants in the crypto space, filed for bankruptcy, leaving customers unable to access their assets. 

These failures, dubbed the “crypto winter,” saw the market lose over $2 trillion in value. Why did these companies collapse, and what can investors learn? This article dives into the major crypto bankruptcies, exploring their causes, consequences, and lessons for navigating this volatile market. Drawing from credible sources like ConsumerNotice.org and real-time insights, we’ll unpack the stories behind these failures and offer practical tips to avoid similar pitfalls.

The Crypto Winter: What Happened in 2022?

In 2022, the crypto market faced a brutal downturn known as the “crypto winter.” Bitcoin’s value plummeted 65%, and the collapse of Terra Luna’s stablecoin triggered a domino effect. Major crypto exchanges and lenders like FTX, Celsius, Voyager Digital, and BlockFi filed for Chapter 11 bankruptcy, freezing billions in customer funds. For example, FTX’s collapse in November 2022 exposed an $8 billion shortfall after founder Sam Bankman-Fried misused customer deposits for risky investments via his hedge fund, Alameda Research. 

Similarly, Celsius halted withdrawals in June 2022, citing market volatility, before filing for bankruptcy in July. Voyager followed suit after a $650 million loan default by Three Arrows Capital (3AC). These bankruptcies affected millions of investors, many losing life savings. Posts on X in May 2025 reflect ongoing distrust, with users citing losses of 800,000–900,000 Bitcoin across these failures. This period exposed the risks of centralized platforms and lax oversight in crypto.

Case Studies: Major Crypto Bankruptcies

Several high-profile bankruptcies defined the crypto winter. Here are the key examples:

• FTX (November 2022): Once valued at $32 billion, FTX collapsed after a CoinDesk report revealed Alameda Research held mostly FTT, FTX’s own token. A bank run ensued, and FTX couldn’t cover $8 billion in withdrawals, leading to bankruptcy and fraud charges against Bankman-Fried.
• Celsius Network (July 2022): Celsius froze withdrawals in June 2022 after investors withdrew $1 billion amid distrust. It filed for bankruptcy owing $4.7 billion, with clawback attempts targeting pre-bankruptcy withdrawals.
• Voyager Digital (July 2022): Voyager’s bankruptcy followed 3AC’s default on a $650 million loan. Its $1 billion asset sale to Binance.US aimed to recover 51% of customer funds.
• BlockFi (November 2022): Tied to FTX, BlockFi filed for bankruptcy after relying on a $400 million FTX credit line. It settled with the SEC for $100 million.

These cases, detailed by ConsumerNotice.org, highlight mismanagement, risky loans, and market volatility as common culprits. Investors faced frozen assets and lengthy legal battles.

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Why Do Crypto Companies Go Bankrupt?

Crypto bankruptcies stem from a mix of market volatility, poor management, and regulatory gaps. The 2022 Terra Luna collapse, where the stablecoin lost its $1 peg, sparked panic withdrawals across platforms. Companies like FTX and Celsius engaged in risky practices, such as using customer funds for speculative investments or undercollateralized loans. For instance, FTX funneled customer money to Alameda Research, while Voyager lent heavily to 3AC, which collapsed. 

Regulatory uncertainty also played a role—SEC lawsuits against Genesis and Gemini for unregistered securities added pressure, leading to Genesis’s January 2023 bankruptcy. The Bankruptcy Code, designed for traditional assets, struggles with crypto’s volatility, creating valuation disputes. Posts on X in 2025 highlight “self-dealing loans” and “fractional reserves” as key issues, with Genesis losing $3.3 billion in Bitcoin and Ethereum. Lack of FDIC insurance for crypto holdings further exposed investors to total losses, unlike traditional bank failures.

Impacts on Investors and the Market

Crypto bankruptcies devastated investors and shook market confidence. Millions of customers lost access to billions in funds—FTX alone affected over one million users. Investors like those in Gemini Earn, linked to Genesis, couldn’t withdraw assets, sparking lawsuits claiming fraud and unregistered securities. The IRS complicated matters by barring tax loss claims for frozen crypto assets in 2023, per Bloomberg. 

Market-wide, Bitcoin hit a two-year low, and the crypto market lost $2 trillion in 2022. Legal battles continue, with FTX’s bankruptcy still unresolved in 2025, and clawback actions targeting pre-bankruptcy withdrawals add uncertainty. However, some platforms, like Binance.US, have facilitated partial recoveries, such as Voyager’s 51% payout. The ripple effect tightened scrutiny, with the SEC launching 26 enforcement actions in 2023. Investors now face a tougher landscape, with trust eroded and calls for stricter regulation growing.

Conclusion

Crypto bankruptcies like FTX, Celsius, and Voyager reveal the industry’s vulnerabilities. Mismanagement, risky investments, and regulatory gaps fueled the 2022 crypto winter, costing investors billions. While the market has rebounded—Bitcoin hit $70,000 in 2024—these failures underscore the need for caution. Investors can protect themselves by choosing platforms with strong KYC processes, avoiding high-yield promises, and seeking legal advice during bankruptcies. 

The lack of clear Bankruptcy Code guidance on crypto valuation continues to create uncertainty, but ongoing lawsuits and regulatory actions signal a push for accountability. As the crypto landscape evolves, understanding these failures helps investors navigate risks and make informed decisions. The crypto winter may have thawed, but its lessons remain critical for a safer financial future.

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FAQ

What caused the 2022 crypto bankruptcies?

Failures like FTX, Celsius, and Voyager stemmed from mismanagement, risky loans, and market volatility, worsened by the Terra Luna collapse.

How did crypto bankruptcies affect investors?

Millions lost access to billions in funds, faced frozen assets, and struggled to claim tax losses, with ongoing lawsuits seeking recovery.

Which crypto companies went bankrupt in 2022?

Major bankruptcies included FTX, Celsius Network, Voyager Digital, BlockFi, and Three Arrows Capital, among others.

How can investors protect themselves?

Use platforms with KYC verification, avoid high-risk lending programs, and consult lawyers to file claims in bankruptcy cases.