The Federal Reserve Bank of Chicago (Chicago Fed) has released a letter combining the major crypto runs that happened in 2022. The bank pointed out the interesting background, data, and when these firms filed for bankruptcy. The letter takes users through Celsius, Voyager Digital, BlockFi, Genesis, and FTX. The Chicago Fed mentioned that due to massive user withdrawals and investment losses, several crypto-asset platforms experienced a significant decline in 2022. These platforms provided a range of cryptocurrency-related products and services, such as custody, trading, and high-yield investments. However, the Chicago Fed mentioned that since clients could withdraw money whenever they wanted while the platforms used it for speculative and hazardous investments, their business models were open to risk. A significant incident involving clients withdrawing a quarter of their money in a single day occurred on the FTX platform. Customers on these platforms were particularly attracted to high-yield investment items. Clients looking for lucrative returns were drawn to them because they promised guaranteed interest rates that were higher than those offered by conventional investment choices. The main investment options included stablecoins and non-stablecoin crypto-assets, with interest rates ranging from 7.4% to 9%. Even higher interest rates than usual were offered by some platforms on a few of the lesser-known cryptoassets they marketed.
Full report : Federal Reserve Bank of Chicago Breaks Down Crypto Runs of 2022.
