A look at the recent bailouts and buyouts in the crypto world

Either way, the Terra meltdown has pushed several firms to bankruptcy, forcing them to look for potential investors who can infuse cash and keep them afloat.

Perhaps, one of the worst-affected firms was BlockFi. The crypto lender took several blows during the crypto winter. Excess operating costs forced it to shed about 20 percent of its workforce in mid-June. At the same time, the US Securities and Exchange Commission (SEC) slapped a $100 million fine on the crypto lender for "selling unregistered securities." This is the biggest fine ever paid by a crypto firm.

BlockFi also acknowledged that it suffered a direct $80 million loss when 3 Arrows Capital (3AC) was liquidated. One of the largest crypto-focused venture capital firms, 3AC, had a $200 million investment in Terra's LUNA token – an amount that was reduced to rubble in a day.

On 21st June 2022, BlockFi CEO Zac Prince made a Twitter announcement that FTX had created a $250 million revolving credit provision for the distressed lender. The post also hinted that the doors leading to "future collaboration and innovation between BlockFi & FTX" had been opened.

On 2nd July, Prince took to Twitter again and announced that FTX sought to acquire BlockFi for "a variable price of up to $240 million based on performance triggers." The revolving credit facility was upped to $400 million in the agreement signed by the two firms.

Canadian crypto investment firm Voyager Digital also found itself caught up in the 3AC debacle. Voyager's exposure to 3AC consisted of 15,250 BTC (worth $370 million at the time) and $350 million in USDC, which 3AC obviously could not repay following its massive losses stemming from the Terra catastrophe.

On 22nd June 2022, Voyager unlocked a revolving credit line from Alameda Ventures, consisting of $200 million in cash and 15,000 BTC to secure its assets. Alameda Ventures is another one of SBF's firms, and revolving credit is like a credit card, i.e., the credit is reset after you repay the owed amount.

Voyager's eventual bankruptcy filing on 6th July 2022 revealed that Alameda Ventures itself owed the former a total of $377 million at an interest rate of 1 percent to 5 percent. Interestingly, the borrower is now the one bailing out Voyager Digital for another $500 million revolving credit facility.

Another one to follow in the footsteps of BlockFi and Voyager is the Singaporean crypto lending platform Vauld. The firm stopped all withdrawals on 5th July 2022, as users began pulling out their funds amid the massive fear and uncertainty within the market. In total, users withdrew $197.7 million in the three weeks between 12th June 2022 and 1st July 2022.

Following these developments, UK-based crypto lender Nexo stepped in and offered to acquire up to 100 percent of Vauld. Interestingly, Nexo had also offered to acquire the assets of the wounded Celsius Network in June 2022, but the latter refused.

Vauld and Nexo then entered into a 60-day window of exclusivity wherein accounts would be studied. "They will open up the books. You will see everything. Is there a hole? How big is the hole? Where are the assets? Who are the counterparties?" Nexo's chief told CNBC. "

Today, in an email to its retail investors, Vauld revealed that it "had a mismatch of assets and liabilities" with assets worth $330 million and liabilities worth $400. The company listed "exposure to UST" as one of the many reasons for this discrepancy. However, Vauld had assured its users of having no exposure to beleaguered firms Celsius Network and 3AC. Bathija also reassured users that interest on deposits would not be impacted whatsoever.