Crypto Winter: Navigating Signs Of Financial Stress

2022 showed us that a tumultuous downturn of the digital asset industry could be an opportunity for M&A. Continued financial challenges may also mean that an insolvency process or debt restructuring is the best path forward.

Background

For the past few years, the crypto markets have made consistent headlines. However, as the industry faces turbulence and price volatility, those headlines have begun to focus on the "crypto winter" and its impact across the industry.

A US$2 trillion crash in 2022 preceded multiple bankruptcies and insolvencies worldwide. Notably, Canadian crypto brokerage and lender Voyager Digital filed for Chapter 11 bankruptcy protection and sought recognition under Part IV of the Companies' Creditors Arrangement Act after market losses rendered the firm incapable of facilitating withdrawals for customers. In its filings, Voyager declared holdings of only US$1.3 billion of crypto assets on US$2.3 billion of retail deposits. On Oct. 21, 2022,