Voyager is the latest digital asset domino to fall. On Tuesday night, the Toronto-based broker and lender filed for Chapter 11 bankruptcy.
It started reorganizing itself less than a week after it stopped trading and stopped customers from getting their money out. Voyager had lost more than $650 million on a loan to Three Arrows Capital, a failed crypto investor based in Singapore. Three Arrows had put a lot of money on the stablecoin Terra, which went bankrupt in May.
Voyager said in the filing that it owed between $1 billion and $10 billion to more than 100,000 creditors. Even though Alameda Research, the trading company run by Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange, gave it a loan to save it last month, it still went out of business.
In today’s Big Read, similarities between the crypto crash and the dotcom bust in 2000 are pointed out. The total value of all cryptocurrencies reached its highest point in November of last year before dropping by about 70%, or $2tn. In the eight months after dotcom stocks reached their peak in early 2000, companies with publicly traded stock are thought to have lost $1.7tn, or 60% of their value.
That bubble popping led to a more stable and long-lasting tech revolution, but a growing number of critics in the tech world say that, unlike the dotcoms, the technology behind crypto has no redeeming qualities at all.
Both economists and central banks don’t think much of it. Martin Wolf looks at the conclusions of the Bank for International Settlements’ annual report, which says that the crash shows that cryptocurrencies are not stores of value but rather things that people buy and sell. This also means that they can’t be used as units of measure. It says, “The popularity of stablecoins, which try to keep their value tied to the US dollar or other traditional currencies, shows that the crypto sector needs to ride on the credibility of the unit of account issued by the central bank.” In this way, stablecoins show how crypto is looking for a “nominal anchor.”
Sadly, the people who lose the most when prices drop are often the ones who can least afford it. A survey by Ariel Investments and Charles Schwab found that 25% of black American investors owned cryptocurrencies at the beginning of the year, while only 15% of white investors did. This is despite the fact that black households have less wealth on average than white households. Taylor Nicole Rogers in New York says that black Americans were more than twice as likely to buy cryptocurrency as their first investment.
One investor tells her, “[Black Americans] don’t want to be left behind again.” “From what I can tell, the black community sees crypto as a way to level the playing field and get into the game before the gatekeepers stop others from joining.”
Some well-known black Americans, like the filmmaker Spike Lee, have told their communities about crypto. Lee was in ads for the crypto ATM company Coin Cloud last year, where he said that “old money is not going to lift us up; it pushes us down” and “systematically oppresses,” while digital assets are “positive and inclusive.” Many people have found out the hard way that they are also very volatile and risky.
Five Things Connected to the Internet
- Meta goes ahead with plans for NFT
Meta, which is owned by Facebook, is still going ahead with plans to give its 3 billion users access to digital collectibles, even though the prices of crypto assets have dropped. Stephane Kasriel, Meta’s new head of fintech, told the FT in his first interview that the company would not change its plans for so-called non-fungible tokens “in any way.” Scott Chipolina, who covers digital assets for us, says that crypto evangelists hope for an NFT utopia in which the tokens will connect our online and offline lives.
- Amazon and the EU reach an antitrust deal
As part of a deal with EU antitrust regulators, Amazon will share more data with its competitors and offer buyers a wider range of products. This will end two of the most high-profile investigations in Brussels. The news came at the same time that the UK’s competition watchdog said it would look into Amazon because of worries that it might be hurting competitors on its platform. Also, a change made to the UK’s online safety bill on Wednesday gives the government the power to order tech companies to change their platforms and fine them if they don’t police material that is sexually abusive to children.
- JET has an equal share of Grubhub
As part of a larger agreement with the online food delivery group, Amazon has made a deal that could lead to it getting a 2% stake in Grubhub, the US branch of Just Eat Takeaway. The news made JET stock go up by 14%. It has been criticized for spending $7.3 billion to buy Grubhub last year, but Lex says the deal is not as big as JET investors might hope.
- The decision on Newport Wafer was put off
The British government has put off its final decision for another two months on whether to let a Chinese company buy Newport Wafer Fab, which is Britain’s largest semiconductor plant. Even though the head of the company called for a quick decision on Tuesday to end the cloud of uncertainty that was over it, this is what happened.
- The BIS says that the financial system depends too much on Big Cloud.
The Bank for International Settlements is worried about both the cloud and cryptocurrency. In a paper released on Tuesday, the central banker’s central bank says that financial institutions’ growing reliance on cloud computing software from a few companies could have “systemic implications for the financial system,” according to Alphaville.
Tech tools — Ten tennis gadgets
While Wimbledon has you in its grip, check out FT Globetrotter’s list of 10 new tennis tools. They include the Saber, a tennis racket with a smaller head that trains you to hit the ball in the “sweet spot,” the Slinger Bag ball machine, and the SwingVision shot-tracking and analysis app.