Ethena partnered with Derive, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. 

The S&P 500 gained 0.05%, reaching another record high as investors analyzed strong October job data. Focus now turns to upcoming labor market reports and Fed Chair Powell's speech on Wednesday. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.38%, with Bitcoin and Ether dropping by 0.002% and 0.05%, respectively in the past 24 hours.

Today's top performer is TRX, which surged 68.6% after TRON DAO was recognized for its Global Blockchain Innovation at the Wiki Finance EXPO 2024.

Tron DAO (TRX), launched in 2017, leverages established blockchain technologies like dApps and smart contracts to enhance user experience rather than innovating on network design. It gained notable attention after acquiring BitTorrent in 2018, emphasizing its focus on proven technologies to potentially reshape Web 3.0. At Wiki Finance EXPO Dubai 2024, TRON DAO was honored with the "

" for its exceptional contributions to advancing blockchain innovation worldwide.

Check Out the Latest Prices, Charts, and Data of 

, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. As part of the partnership, Ethena provided a multi-million dollar grant, and sENA holders will receive 5% of Derive’s DRV token supply. Derive, with 75% market share in on-chain options, processes $250M weekly volume and supports advanced financial products. This collaboration strengthens Ethena’s ecosystem, promoting USDe adoption and enhancing DeFi innovation with Derive’s expertise and composable financial tools. Ethena invites builders to join its growing network.

Yesterday, the BTC Spot ETF saw a total outflow of $17.3 million, with GBTC showing no flow and Non-GBTC experiencing an outflow of $17.3 million.

 will be available for claim on December 6, 2024, at 10 AM UTC. A total of 750 million $F tokens (7.5% of the supply) are allocated for eligible participants. The airdrop will be fully unlocked immediately. Eligibility includes SynFutures v1 and v2 users, v3 Oyster Odyssey points holders, long-term active users, and winners of select community campaigns. For more details, visit the official claim site and the 

Beginner

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Ethena Partners with Derive to Boost USDe Adoption and Enhance DeFi Innovation

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market.

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market. With significant growth in both its user base and variety of trading products, Bybit is not only expanding its offerings, but also enhancing its market influence. This article highlights the attached report’s key messages, focusing on user growth, spot trading, perpetual futures and options trading.

Since its inception in 2018, Bybit’s user base has experienced explosive growth, surpassing 60 million users by Q3 2024. This remarkable increase — from 20 million users in late 2023 — underscores both the platform's appeal and the growing global interest in cryptocurrency trading.

Several factors have contributed to this user growth. First, Bybit's continual innovation and its introduction of new trading products have attracted a diverse range of traders. Additionally, the platform’s user-friendly interface and robust educational resources have made it accessible to newcomers in the crypto space.

Moreover, the rising popularity of cryptocurrency, as well as favorable market conditions — such as the anticipation surrounding Bitcoin Spot ETFs — have drawn more users to the platform. The report indicates that the influx of new users has led to increased activity, further driving demand for various trading pairs.

Spot trading on Bybit has seen significant expansion, with daily volumes exceeding $10 billion by 2024. This growth is particularly notable given the turbulent market conditions that have characterized the past few years. The report highlights that spot trading volumes grew steadily, especially during bullish market phases, driven by heightened interest in altcoins alongside Bitcoin.

The number of available spot trading pairs has more than doubled from 2022 to 2024, catering to the diverse preferences of traders. Increased spot pair availability has not only attracted more users, but has also contributed to a robust trading environment in which traders can capitalize on various market opportunities.

Tellingly, the report notes the relationship between Bitcoin's price movements and spot trading volumes. As Bitcoin rallies, there’s a substantial uptick in trading activity for both Bitcoin and altcoins, indicating a capital rotation effect that’s common in cryptocurrency markets.

Perpetual futures remain one of Bybit’s most popular trading instruments, consistently outpacing spot trading volumes. During the March 2024 rally, perpetual trading volume reached nearly $70 billion, highlighting traders' preference for leveraged trading options that these contracts provide.

The appeal of perpetual futures lies in their flexibility, allowing traders to take both long and short positions while utilizing 

 to amplify potential gains. This makes perpetual futures an attractive option for traders seeking to optimize their capital efficiency.

Despite the steady growth in spot trading, perpetual futures have maintained a dominant position in the market. The report indicates that while spot trading volumes have increased, they still lag behind those of perpetual futures, reflecting a strong preference among traders for these derivative products.

Bybit’s continual enhancement of its perpetual futures offerings, including a wider range of trading pairs, has further solidified its leadership in this segment. The growth trajectory of perpetual futures is expected to continue, particularly if market conditions remain favorable.

 market, although smaller than its perpetual futures segment, is experiencing noteworthy growth. Since its launch in 2022, the options market has expanded, reflecting an increasing number of traders willing to engage with more sophisticated trading instruments.

The report reveals that Bitcoin options dominate open interest within Bybit’s options market, with a growing preference for call options over puts. This trend indicates traders’ optimism about Bitcoin’s future price movements, particularly following the recent price rallies.

Solana options, introduced more recently, are also gaining traction, showcasing the evolving landscape of cryptocurrency derivatives. The report highlights a clear upward trajectory in open interest for Solana options, driven by increasing demand for exposure to emerging cryptocurrencies.

As traders become more familiar with options trading, the market is expected to mature, providing further opportunities for innovative trading strategies and 

Bybit’s sixth anniversary marks a significant milestone in its journey as a leading cryptocurrency exchange. With a rapidly growing user base, robust spot trading activity, dominant perpetual futures volumes and burgeoning options market, Bybit is well-positioned for continued success.

These developments not only reflect Bybit’s commitment to enhancing its offerings, but also highlight the broader trends within the cryptocurrency market. As traders seek diverse and sophisticated trading instruments, Bybit’s adaptability and innovation will likely play a crucial role in shaping its future.

Advanced

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Bybit’s 6th Anniversary: A Journey of Growth and Milestones Toward Becoming the No. 2 Crypto Exchange

Bybit Cloud Wallet offers a seamless way to manage cryptocurrencies without having to handle private keys. Learn more about how it works in this article.

Bybit Cloud Wallet makes crypto management seamless for everyone by offering a user-friendly platform for storing and managing cryptocurrencies without the hassle of handling 

 not only enhances security but also simplifies interactions with Bybit Web3 services. In this article, we'll explore how Bybit Cloud Wallet works and its benefits and risks, and provide a step-by-step guide to using the wallet. 

Bybit Cloud Wallet is a custodial digital wallet integrated with the Bybit platform, allowing users to store and manage cryptocurrencies without handling private keys directly. It offers enhanced security and accessibility for web3 interactions.

Bybit Cloud Wallet is a custodial wallet, meaning that Bybit manages the private keys on behalf of its users. This design simplifies the experience by removing the burden of securely storing seed phrases or private keys. It integrates with Bybit accounts to streamline cryptocurrency management and provide secure handling for private keys.

Users can access their wallet by logging into their account and completing the Cloud Wallet setup. A unique wallet address is generated, and the associated private keys are securely stored on Bybit's cloud servers. Once the wallet is configured, users can safely store, manage and transact a variety of digital assets. 

When initiating transactions — such as sending or receiving cryptocurrency — a request is created and securely transmitted to Bybit’s servers. The provider verifies the request using the stored private keys, ensuring it’s been authorized by the rightful owner.

Depositing funds into the Bybit Cloud Wallet is straightforward, and users can transfer cryptocurrencies from other wallets within the Bybit Web3 platform with ease. Withdrawals follow a similarly simple process, whereby users specify the amount and destination address while selecting their preferred gas fees.

The wallet uses standard security protocols to protect user accounts and funds from unauthorized access. While the custodial nature of the wallet makes it user-friendly, it also necessitates trust in Bybit's security practices.

Bybit Cloud Wallet integrates with various Bybit Web3 services, enabling users to trade, 

 (DApps) directly through the wallet’s interface.

Bybit Cloud Wallet offers a range of benefits for users seeking an efficient and secure way to manage their cryptocurrency assets.

While Bybit Cloud Wallet offers numerous advantages, users should also be aware of several inherent risks associated with its use.

: Navigate to the Bybit homepage and log in to your Bybit account. Then, click on the 

tab on the top left corner of the page. 

. This will generate a unique wallet address associated with your account.

Now that you’ve created your Bybit Cloud Wallet, here’s how you can deposit tokens and start interacting with DApps. There are two ways in which you can deposit tokens into your Bybit Cloud Wallet — by transferring from your Bybit Funding Account, and by transferring from your external wallet.

: Please ensure that you already have funds in your Bybit Funding Account before you proceed with the steps below. 

: Hover your cursor over your profile icon in the upper right corner of the Bybit homepage, and click on 

 (Web3) and your Bybit Wallet (Web3) address will automatically be filled. Select your preferred 

and enter the amount you wish to withdraw to your Bybit Wallet (Web3).

: After you’ve checked and verified all details, click on 

Congratulations! You’ve successfully transferred assets from your Bybit account to your Bybit Cloud Wallet!

Let’s use MetaMask and the BNB chain as an example. 

: Navigate to your MetaMask wallet. Then, click on the 

. Click on the copy icon to copy your Bybit Wallet address.

and paste your Bybit Cloud Wallet address into the input box. 

: Please make sure you choose BSC. Otherwise, your USDT and BNB may not be transferred successfully.

Congratulations! You’ve successfully transferred assets from your external wallet to your Bybit Cloud Wallet.

 next to the token you would like to withdraw, and transfer your funds to your Bybit Funding Account.

, enter the amount you would like to withdraw, choose your gas fees and click on 

: Confirm the details, request the verification code and submit your withdrawal request.

 next to the token you would like to withdraw, and transfer your funds to your external wallet.

: Enter the receiving wallet address and the amount, and choose your gas fees. Click on 

: Review the details, submit the verification code and confirm your withdrawal.

: To view your transfer history, hover your cursor over the 

tab in the top-right corner of the Bybit Web3 page, and click on 

: You can check your deposit and withdrawal history under either the 

Who Is Best Suited to Use the Bybit Cloud Wallet?

Bybit Cloud Wallet combines ease of use with robust security measures, making it a suitable option for users who prefer not to manage their own private keys, while still being able to conduct cryptocurrency transactions.

Individuals who are new to cryptocurrencies will find Bybit Cloud Wallet appealing due to its user-friendly interface and custodial nature, which eliminates the need for managing private keys. This accessibility allows users to engage with digital assets without needing extensive technical knowledge.

 services will also appreciate the wallet's integration with various DApps and platforms, allowing for easy interaction within the blockchain ecosystem.

Deciding whether to use the Bybit Cloud Wallet depends upon your specific needs and preferences. If you value security, convenience and the ability to manage multiple cryptocurrencies within a single platform, Bybit Cloud Wallet is a strong choice. However, if you prefer having full control over your private keys and assets, a 

 might be a better option. Consider your priorities and the level of control you desire over your digital assets when making your decision.

Bybit Cloud Wallet offers a secure and convenient way to manage cryptocurrency assets without the complexity of handling private keys. Its seamless integration with Bybit Web3 services makes it ideal for beginners and experienced users alike, enabling easy interactions with DApps and DeFi platforms. While Bybit Cloud Wallet offers strong security and user-friendliness, the risks of using a custodial wallet remain a consideration for those seeking full control over their assets.

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Bybit Cloud Wallet: Seamless Crypto Management for Everyone

USUAL introduces USD0, a stablecoin backed by U.S. Treasury Bills, offering transparency, security, and revenue sharing through its governance token, USUAL.

More than a decade ago, in mid-2014, the first 

 arrived on the stage of the crypto market. These cryptocurrencies were designed to provide stability in the typically volatile world of crypto, and to serve as a bridge between the traditional finance (TradFi) and 

 (DeFi) ecosystems. At the core of their functionality is a mechanism that maintains a close peg to some traditionally valued asset, be it the U.S. dollar, euro or 

Stablecoins have proved to be tremendously popular, with the leading asset in this niche, 

 (USDT), routinely attracting higher trading volumes than any other cryptocurrency — including the mighty Bitcoin. The second most popular stablecoin in the market, 

 (USDC), also enjoys multibillion-dollar daily trading volumes, and ranks among the top 10 cryptocurrencies by market cap.

Despite their popularity, many leading stablecoins — including the dominant USDT and USDC pair — have opaque collateral management mechanisms, are lacking in transparency, don't distribute revenues to the wider user community and are highly centralized in terms of control.

Usual (USUAL) is a DeFi solution launched on the 

 (ETH) blockchain that aims to tackle these deficiencies of traditional stablecoins by offering a 

 (RWA)–backed stablecoin and redistributing protocol revenues among its users. The platform's primary stablecoin — USD0 — is backed by collateral invested mainly in short-term U.S. Treasury Bills; maintains a tight peg to the greenback via these secure investments; has a fully transparent reserve verification system; and opens up additional yield opportunities across a variety of external DeFi protocols via a 

 (USUAL) is an Ethereum-based DeFi platform that offers an RWA-backed, USD-pegged transparent stablecoin, USD0, and distributes protocol revenues among its user community. 

USD0 is backed by collateral invested in RWAs, primarily in short-term U.S. Treasury Bills. The short-term, highly liquid and secure nature of these government-issued assets ensures that USD0's peg to the U.S. dollar isn't likely to be compromised.

Usual has partnered with Hashnote, a Florida-based regulated provider of digital and tokenized fund products, to facilitate secure investment in U.S. Treasury Bills and associated products.

Usual's USD0 is a unique stablecoin product, distinct from the dominant assets in this niche, 

 and USDC. While these cryptocurrencies also maintain fiat reserves to back their value, they’re controlled by centralized corporate entities, and their USD reserves are exposed to the traditional banking system, with poorly known levels of risk associated with them.

, whose values aren’t backed by fiat assets, and which are highly dependent upon underlying protocols’ activity to maintain their pegs. In many cases, these algorithmic coins lose their pegs and stability when the underlying lending or borrowing activities on their protocols are manipulated by 

 or become subject to panic-driven runs. The most notorious example was the 2022 

Usual’s platform also offers a liquid staking version of USD0, USD0++, which can be used throughout the DeFi ecosystem for additional yields. It has partnered with several Ethereum DeFi protocols to expand the universe of platforms where USD0++ can be utilized, including 

Usual also has another distinct feature: the protocol aims to distribute future revenue among its users, specifically among holders of its upcoming USUAL 

The platform was developed by the France-based Usual Labs, a blockchain development outfit co-founded by Adli Takkal Bataille, Hugo Sallé de Chou and former French parliament member Pierre Person. Usual launched the USD0 stablecoin in mid-2024. In late November 2024, the platform introduced the USUAL governance token, set to be launched sometime in mid-December 2024.

The introduction of the USD0 stablecoin is a potentially paradigm-changing event for the crypto market. This innovative asset adopts many of the advantages of fiat-backed stablecoins, but also resolves many associated issues. Usual Labs has targeted several goals with the advent of USD0 and its unique working mechanism.

One key aim is to change the way that profits from decentralized stablecoin operations are shared. Usual's revenue is to be shared with the user community — namely, the holders of the USUAL token. All the revenue generated from the platform's operations flows to its treasury. USUAL holders are in charge of this revenue, making them eligible to decide on the actual distribution. In essence, owning USUAL entitles you to a share of potentially 100% of revenue generated by the platform.

This starkly contrasts with the way that other fiat-backed stablecoins, notably USDT and USDC, operate. All the revenues generated from these stablecoins are appropriated by their respective founding companies — Tether Limited for USDT, and Circle Internet Financial Limited for USDC. While the risks from the operations of these assets are externalized and shared with holders of the stablecoins, the revenues are internalized and scooped up by Tether and Circle.

Another aim of the Usual project is to bring transparency to the management of collateral that backs the USD0 stablecoin. As a decentralized protocol, Usual provides the transparency of collateral funds' allocation. Again, this contrasts with the opaque nature of the way that USD collateral for some stablecoins is managed. Tether's USDT has particularly 

 in the crypto investor community, as the company has never conducted a full-scale audit for its vast claimed dollar reserves.

Another aim of Usual is to provide a stablecoin that’s completely secure from exposure to the traditional, fractional reserve-based banking system. Some crypto investors have derided the fractional reserve system, whereby only a small proportion of client liabilities are actually held at any given time by banks. Projects like USDT and USDC rely heavily on the traditional banking system, which backs their U.S. dollar reserves. These banks naturally rely on fractional reserves that, at least in the opinion of the most risk-averse investors, exposes them to 

In contrast, USD0 is backed by short-term U.S. Treasury Bills, an asset class that’s fully backed by the U.S. government's pledge. These are considered among the safest assets in the world of finance, as the U.S. government has never yet defaulted on its payment obligations. Unlike USD deposits in banks, USD0's Treasury Bill–based collateral isn't exposed to the risks of the fractional reserve system. As such, the coin's collateral is based on a government-backed asset, providing a level of security that most fiat-based stablecoins in the market are unlikely to match.

Usual uses a three-token model to power its operations and services. There's the fiat-backed USD0 stablecoin, which is protected by Treasury Bill collateral. The second asset is the USD0++ LST, a derivative of USD0 issued upon staking the latter. And there’s the USUAL governance token that grants holders the right to participate in decision-making on the protocol's rules and future direction.

The Usual protocol provides two ways to mint the USD0 stablecoin:

:This is normally done by investing in the USYC fund and using it as collateral, then depositing it into the mint engine to mint USD0. USYC is an on-chain representation of the Short Duration Yield Fund (SDYF) provided by Hashnote, a regulated provider of tokenized fund products. USYC/SDYF is based mainly on U.S. Treasury Bills with short-term maturity.

:You can also mint USD0 indirectly on a 1:1 basis by supplying the USDC stablecoin as collateral.

Redeeming the stablecoin is also possible in two ways — directly through the protocol, or via the secondary market. When using direct redeeming, you simply withdraw your RWA collateral using the protocol's interface. Alternatively, you can sell USD0 for USDC or USDT via a secondary market platform, such as 

 (CRV), a popular DeFi protocol that specializes in stablecoin assets.

USD0++ is an LST representation of USD0. When you stake USD0 on the platform, you’re issued USD0++, which is fully composable and can be used on various Ethereum-linked protocols to earn additional yield. You can lock USD0 to get issued USD0++ for four years. However, you’re also free to unstake at any time.

Staking rewards from locking USD0 to get USD0++ are paid in USUAL tokens. Usual's model rewards long-term staking commitments, as users are encouraged to stake for at least six months — this is the minimum period of staking required to qualify for what the protocol calls the 

 (BIG). BIG essentially refers to a guaranteed yield from native staking of the underlying RWAs on the Usual protocol. When the period concludes, the staker can choose to collect the yield in either USUAL or USD0.

Yields start accumulating from day one of staking. Although users are free to unstake at any time, those who do so before the six-month minimum period will forfeit accumulated rewards.

USUAL is the Usual protocol's governance crypto token. It was unveiled on Nov 19, 2024, and is currently in pre-market mode only. It's expected that USUAL's public launch will occur in the near future. As USUAL is a community-first token, 90% of the tokens are distributed to the community with only 10% allocated to insiders (team and investors).

Usual feeds its revenues into its protocol's treasury, which is controlled by the USUAL holder community. As such, USUAL holders own 100% of the platform, a significant departure from the system used by many other stablecoin issuers, whereby a corporate entity earns all or the majority of the profits. 

Additionally, Usual is designed such that its protocol will incentivize early adopters and long-term holders. As the TVL of USD0 increases, Usual will generate more revenue. The emission rate of USUAL is also disinflationary, gradually reducing as the TVL of USD0 rises and enhancing the scarcity of the token, which will subsequently lead to a boost in its value.

At the initial stages of the platform's market presence, Usual Labs is largely responsible for governance decision-making. However, this function will be taken over by USUAL holders, likely in the form of a 

Although called a governance token, USUAL has additional functionalities beyond supporting the protocol's governance processes. It’s also used to distribute yields from staking ( as discussed in the section above on USD0++). Rewards from the protocol's loyalty point campaigns are also airdropped in USUAL. 

In addition, USUAL can be staked for additional governance rights and rewards. USUAL stakers will receive 

, from which they can earn a portion of USUAL emissions and 50% of the fees generated from people unstaking their Usual assets (USUAL or USD0++).

USUAL's maximum and total token supply are specified at 4 billion. The initial circulating supply during the early days of the token's pre-market trading is close to 500 million as of Dec 2, 2024.

The Usual protocol ran a points-based reward program from July through the last week of November 2024. Called the 

, it let early users accumulate points by acting as liquidity providers before the protocol's full public launch phase. The accumulated Pills points will determine users' eligibility for a USUAL airdrop, slated for mid-December.

The airdrop will allocate 8.5% of the token's supply to eligible users — the more Pills points you've earned, the more USUAL tokens you’ll receive.

During the token's pre-market trading stage, Bybit is one of the rare platforms that’s allowing you to access it. As of Dec 2, 2024, 

 on Bybit's Pre-Market Perpetuals Trading platform as a 

 lets you invest in a variety of upcoming cryptocurrencies via USDT-based perpetual futures contracts before these assets are listed on the main spot or derivatives markets. Using this platform, you can access a range of promising new crypto assets before they become publicly available. There are two main limits enforced by Perpetual Pre-Market — the position size cannot exceed $250,000, and leverage is permitted up to 5x.

Stablecoins are one of the oldest asset types in the crypto industry, while RWAs are a much newer trend that’s growing increasingly popular among investors. The Usual project has decided to marry these two areas, providing an RWA-backed, USD-pegged stablecoin — USD0. The concept of using an RWA for stablecoin collateral may not be totally unique. However, using a highly secure asset such as U.S. Treasury Bills with short-term maturity is something that truly distinguishes the Usual protocol.

Distributing revenue among the governance token holder community is also a refreshing innovation in a niche dominated by providers who largely internalize protocol incomes. Currently, the stablecoin market is heavily dominated by USDT and USDC, with 

 (FDUSD) also recently posting impressive, multibillion-dollar daily trading volumes. All three of these stablecoin issuers lack a mechanism to share revenue with their users. A major stablecoin provider that utilizes a democratized way of sharing protocol revenues with the user community is a deserted area, one that the Usual platform is keen to claim.

With all these merits of the Usual protocol, the upcoming USUAL token is a promising and potentially rewarding asset. Investors interested in stablecoins grounded in highly secure TradFi collateral might want to take a closer look at these new arrivals on the block — the USD0 stablecoin and the USUAL governance token.

Intermediate

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Usual (USUAL): A New Model of Collateralized Stablecoin Ownership

Bybit Learn

Investing

Curious about recent crypto-related Chapter 11 bankruptcy filings? Find out how it differs from traditional bankruptcies and the crypto implosion that ensued.

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What is a Chapter 11 bankruptcy, and how does it differ from others? Chapter 11 bankruptcy can protect a company, while leaving investors without repayment of debt owed. A crypto bankruptcy repayment plan can vary from other types, especially when debt is considered unsecured. In this article, we’ll define Chapter 11 bankruptcy and examine its effects on the average crypto investor.

Chapter 11 bankruptcy is commonly referred to as “reorganization” bankruptcy. Crypto investors need to know what a Chapter 11 bankruptcy is, and how it can affect them.

Chapter 11 and Chapter 7 bankruptcies might seem similar, but they’re very different. One bankruptcy involves liquidating assets, while the other one reorganizes debts. When a company is in dire financial straits, they can choose between several types of bankruptcies. Chapter 11 and Chapter 7 are the most common types. 

Chapter 7 is often referred to as a "liquidation" bankruptcy, as businesses move past the initial stage of reorganization and focus on selling off their assets. Usually, the bankruptcy court appoints a trustee to ensure all creditors receive payment in the correct order, which follows the rules of absolute property. For example, secured debt takes precedence over any unsecured debt. As a result, secured debts are the first to be paid. Once they’re paid off, the remaining cash and assets are pooled and distributed to creditors with unsecured debt.

On the other hand, Chapter 11 bankruptcy is intended to reorganize a business. It’s a complex form of bankruptcy. Not only are the filing fees expensive for Chapter 11, but the business must head to court several times during the reorganization process. Unlike Chapter 7, Chapter 11 bankruptcy allows the company to reorganize debts, emerging as a healthier business.

Companies that want to file for Chapter 11 bankruptcy must request a bankruptcy court hearing. During this process, the debtor remains in business while trying to stabilize their company. These stabilization efforts may include selling off assets, cutting expenses and attempting to negotiate with debtors. All of these actions remain under the supervision of the court.

Debt is not absolved in a Chapter 11 bankruptcy, meaning the restructuring only changes the debt terms. The debtor must pay back the creditors with future earnings. When a company successfully emerges from Chapter 11, it operates with a newly structured debt. Unfortunately, if Chapter 11 is unsuccessful, the business will file for a Chapter 7 bankruptcy, and the company may then liquidate its assets to pay off debts.

Let’s look at the differences between a Chapter 11 and Chapter 13 bankruptcy filing.

There are fundamental differences between Chapter 11 and Chapter 13 bankruptcies. Filing for Chapter 13 must implement a plan to repay the debts within three to five years. In most cases, the debtor may keep some assets. Chapter 13 bankruptcy filers often pay a monthly amount to a trustee, who then pays the creditors.

Chapter 13 bankruptcies require a trustee. However, Chapter 11 bankruptcies make this optional, and the trustee isn’t needed in most cases. The trustee reviews the bankruptcy proposal, makes recommendations to the court and distributes creditor payments. The Chapter 11 process can often be drawn out, taking several years to complete. Chapter 13 bankruptcy has a shorter approval process than Chapter 11. However, all disposable income must be made available to the trustee for distribution to the creditors during the repayment process.

What Happens During a Chapter 11 Bankruptcy Filing?

All Chapter 11 bankruptcies start with a petition filed in court. To qualify for Chapter 11, the debtor must not have any past bankruptcies deemed "non-compliant" by the courts. With the filing, the debtor must submit an income and expenditure schedule. The business must also list assets, liabilities, unexpired leases and executory (still to be fulfilled) contracts. Once the debtor files the petition, the company assumes the role of "debtor in possession," meaning that it retains control of operations and assets during the reorganization process.

The petition includes the debtor’s following information:

When the court receives the petition, it charges a $1,167 filing fee and an administrative fee of $500. The fee must be paid in whole or as installments to the court.

The company must also file a plan of reorganization and disclosure statement with the court. The reorganization plan will contain the classification of debt claims and the treatment of each one. If the creditor has an impaired claim, the creditors can vote to accept or reject the plan of reorganization through balloting. A creditor's claim is considered impaired when the original terms of the debt change in a negative way, such as lengthening the payout period or reducing the interest rate.

A disclosure statement contains details about the debtor's liabilities, assets and business affairs. This information often allows the court to make informed decisions about the plan of reorganization. After the court has reviewed the disclosure statement and tallied the creditors' votes, it conducts a hearing on confirming or denying the plan of reorganization.

Since the Chapter 11 bankruptcy puts the debtor "in possession," the debtor is responsible for handling several functions, such as accounting for assets, filing reports with the court and examining any objections to claims. With the court's approval, the debtor in possession may employ professionals to help with these duties. These can include auctioneers, accountants, attorneys and appraisers.

Sometimes, a trustee may be required to monitor the debtor's progress in these reporting requirements. If the debtor in possession fails to comply with specific reporting requirements, the trustee may file a motion to dismiss Chapter 11, or have the case assigned to another bankruptcy chapter.

Some businesses may ask, "What is Chapter 11 bankruptcy, and how can it help with current judgments?" During this time, an automatic stay order goes into effect, suspending all foreclosures, collection activities, judgments and repossessions that occurred before the petition. Once the petition is filed, the stay against the creditor(s) immediately goes into effect. As a result, the debtor will have a chance to hold negotiations to resolve any financial distress. In some cases, secured creditors may apply for relief from the automatic stay to foreclose on assets and receive sale proceeds to satisfy their debts.

Once the Chapter 11 bankruptcy is filed, the debtor must have a plan within 120 days. Occasionally, the court can grant another 180 days to receive a confirmation for the plan. The plan's creditor claims are designated into classes for treatment in the reorganization plan. Additionally, the plan lists creditors in order of priority for repayment, with secured debts at the top of the list.

In a Chapter 11 bankruptcy, an entire class of creditors must approve the reorganization plan. At least two-thirds of creditors, or one-half of the allowed claimants, must accept the reorganization plan. Also, it needs to be approved by one class of creditors who have impaired claims. After that, the reorganization plan is considered accepted by the majority of creditors.

Even if a class of creditors objects, the plan may move on, as long as specific requirements are met. The reorganization plan must be equitable and must not discriminate against a particular class of creditors. If there are no objections, the court will confirm the plan, which must comply with the rules outlined for Chapter 11 bankruptcy. After a ruling in court, the plan becomes binding and defines how the debts will be treated.

However, the court may decide not to accept the Chapter 11 bankruptcy reorganization plan. In this situation, the court can either convert the case to a Chapter 7 bankruptcy filing or dismiss it. A rejection of the plan will return the business to the same status as before the filing. With that, creditors may opt for a non-bankruptcy filing to protect their interests.

We’ve described what a Chapter 11 bankruptcy is — but what does it mean for crypto firms? Let’s find out, as some companies have filed for

 or crypto-related Chapter 11 bankruptcies to protect their assets.

What Happens to Existing Investors If a Crypto Firm Files for Bankruptcy?

When a crypto firm files for a crypto-related or Bitcoin Chapter 11 bankruptcy, their stocks and bonds continue to trade on the exchange, allowing them to proceed with normal business operations. Any firm facing a crypto bankruptcy must report its changes to the SEC. With the announcement of a Chapter 11 bankruptcy protection, there’s a risk that shares could lose their value. The announcement of a Chapter 11 bankruptcy may cause a company’s stocks and bonds to plummet, despite the reorganization plan put in place to satisfy creditors. 

Unfortunately, investors are the least protected entity in a crypto bankruptcy. Custodially held crypto assets are considered the property of the bankrupted firm. In a crypto bankruptcy, the asset may be subject to bankruptcy proceedings. In other words, customers could be treated as unsecured creditors. As such, these investors have little or no resources to recover their cryptocurrency or the equivalent cash balance in the event the firm goes bankrupt.

Chain of Events That Led to the Recent Crypto Implosion

News of any crypto bankruptcy often shakes investors. While cryptocurrencies have hit all-time highs over the past couple of years, there’s been a downturn of approximately 75% over the last few months. Crypto Chapter 11 filings have created fear in the market.

Terra Ecosystem Experiences Unparalleled Growth

At one time, Terra (LUNA) was the most successful blockchain platform. Its native token,

, benefited from the growth of the stablecoin known as

 ecosystem started to gain mainstream popularity with many investors. In 2021, LUNA traded at an all-time high of $199. Additionally, the entire Terra DeFi ecosystem was valued at $45 billion.

With Terra’s unprecedented gains, a crypto bankruptcy wasn’t even on the radar for most investors. Many believed Terra would never head toward a crypto bankruptcy with its unprecedented gains. However, there were other indicators that the crypto market was headed for turbulence.

While Terra experienced unparalleled growth, there were signs of cracks in the company. Few people knew that these signs would cause a shift in the entire crypto market.

 closed down the company on May 4, 2022. This action took place days before the collapse of UST and LUNA. After a general shareholder meeting on April 30, 2022, Terraform Labs Korea dissolved its branches in Seoul and Busan. Do Kwon was listed as the liquidator in the crypto bankruptcy filings. After that, the platform began to face more challenges in the market.

The TerraUSD stablecoin, UST, briefly lost its peg to the U.S. dollar, falling to $0.987 on May 8, 2022. UST was once known as the largest

, and some investors considered it the backbone of the crypto economy. Unfortunately, UST lost its peg after the team embarked on a bid to build its

 and Bitcoin reserves. Depegging often occurred when investors made significant withdrawals from

, a lending market that offers high yields to users who deposit UST. Large quantities of UST were also withdrawn from liquidity pools, including withdrawals made by Terraform Lab’s creators.

Panic Withdrawals Cause LUNA and UST to Plummet in Value

After these events, LUNA and UST prices rapidly lost between 70% to 99% of their value. Terra had focused on building its reputation and fame in the stablecoin space, but its price plummeted after the depegging. Unlike most other stablecoins, which are backed by

, UST was backed by an algorithm that maintained its price. To support UST, LUNA had to be minted. As panic set in, investors and traders quickly sold their UST for other currencies, creating a stunning price fall for both UST and LUNA.

Crypto Entities State ‘Extreme Market Conditions’ as Main Reason to Halt Withdrawals

The debacle with LUNA and UST caused panic in the market. In some cases, these extreme market conditions put a halt to withdrawals. When news of the LUNA and UST fiasco hit, the company paused all withdrawals to avoid causing more pain to the fragile market.

 has been one of the most prominent players in the crypto lending space, with over $12 billion in assets and $8 billion in assets lent to clients. However, the move raised concerns about its solvency as the value of its assets fell by half in less than six months. Celsius is the biggest holder of CEL, which has seen 97% of its value erased. Many wondered if Celsius was going to be the next firm to file a crypto bankruptcy, which they eventually did on July 13, 2022.

Major Firms Are Caught Off Guard With News Leaks of Exposure to Terra Ecosystem 

The implosion of the Terra ecosystem caught many of the major crypto platforms off guard, leaving them to wonder about the possibility of more Chapter 11 bankruptcy filings for crypto firms. Only months earlier, UST had been the leading stablecoin in the market. The situation with LUNA and UST sent the crypto market into a tailspin. Like Celsius, many significant firms sought ways to reduce the pain in the crypto market. While these stops may have helped stabilize the market in the short term, they’ve also led to uncertainty and the fear of another crypto bankruptcy announcement.

Hedge Funds, Brokerages and Lending Platforms Face Insolvency Risks

The Terra ecosystem’s weaknesses have highlighted other problems in the crypto marketplace, leading to fear of more Chapter 11 filings. While many crypto lending platforms, hedge funds and brokerages had looked like can't-miss investment opportunities, the past two months have shown that some of them are at risk of insolvency. When these entities file for crypto bankruptcy, there’s hardly any protection for investors, further compounding investors’ fears.

Major Crypto Firms That Have Filed for Chapter 11 Bankruptcy Protection

Along with the woes of the Terra ecosystem, other major firms have filed for their own crypto bankruptcies. Some of these firms include:

Three Arrows Capital (3AC) has backed many projects, including holding approximately $200 million in LUNA coins. With the broad decline in the market, LUNA's prices fell. As a result, 3AC failed to meet its margin call and 

 from Voyager Digital. While Three Arrows Capital didn’t officially file for a crypto bankruptcy, its liquidation was ordered by the court in the British Virgin Islands on June 27, 2022. 

The actions of Three Arrows Capital may have been the cause of

's own crypto bankruptcy. Voyager Digital needed to protect its assets after Three Arrows Capital 

Crypto Chapter 11 Bankruptcies in 2022: What You Need to Know

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