The 2022 Crypto Lending Collapse: Celsius, Voyager, BlockFi

In 2022 the largest crypto lending and “interest account” businesses collapsed within months of each other, freezing and losing billions of dollars of ordinary customers’ money. This is the single most important thing to understand before you earn interest on crypto, because the companies that failed were the household names, and their advertising promised safety right up to the moment the withdrawals stopped. Every date below is a matter of public record. This is education, not financial advice.

The collapse in one timeline

The failures were fast, clustered and connected. A hedge fund’s default, an algorithmic “stablecoin” imploding, and over-leveraged lenders all fed into one another across a single summer, and the aftershocks ran into the following year. The timeline below is the short version; the sections after it explain each collapse.

Terra and UST: the ~19.5% that started the cascade

The trigger was Terra’s UST, a “stablecoin” whose main draw was the Anchor Protocol paying around 19.5%. That rate was subsidised rather than earned, and it pulled in enormous deposits. In early-to-mid May 2022 UST lost its dollar peg; the mechanism meant to defend the peg minted vast amounts of the linked LUNA token, whose price fell from roughly $80 to a fraction of a cent within days, wiping out about $50 billion of value. The collapse vaporised capital directly and set off panic and losses across every firm exposed to it. The full mechanism is in our guide to stablecoin yield and depeg risk.

Three Arrows Capital: the domino

Three Arrows Capital (3AC) was a large, highly leveraged crypto hedge fund with heavy exposure to Terra. When Terra collapsed, 3AC could not meet its obligations and was ordered into liquidation in late June 2022, defaulting on loans from several lenders. Those lenders had taken customer deposits — yours and everyone else’s — and lent them to 3AC. When 3AC did not pay them back, the hole appeared directly on the balance sheets of the interest-account platforms, which is how a hedge fund’s bad bets became a retail depositor’s frozen account.

Celsius: froze in June, bankrupt in July, fraud verdict in 2025

Celsius was the biggest of the interest-account lenders, marketing double-digit “interest” and the slogan “Unbank Yourself”. On 12 June 2022 it froze all withdrawals, swaps and transfers, trapping customer funds overnight, and on 13 July 2022 it filed for Chapter 11 bankruptcy owing customers roughly $4.7 billion. It did not end there: its founder and former CEO, Alex Mashinsky, pleaded guilty to fraud and on 8 May 2025 was sentenced to 12 years in prison and ordered to forfeit $48.4 million. The lesson is stark — the platform with the most trusted brand and the loudest safety marketing was the one that failed hardest.

Voyager: frozen deposits and a false safety-net story

Voyager Digital had lent a large sum — reported at around $650 million — to Three Arrows Capital, which it did not get back. On 1 July 2022 Voyager suspended trading, deposits and withdrawals, and it filed for Chapter 11 on 5 July 2022. Adding insult to injury, Voyager had suggested customer dollars were protected in a way they were not; in 2022 US regulators ordered it to stop making false or misleading claims about federal deposit insurance. Deposit insurance covers a bank failing, not a crypto platform lending your coins to a hedge fund — a distinction Voyager’s customers learned the hard way.

BlockFi: an SEC settlement, then FTX finished it

BlockFi ran BlockFi Interest Accounts, where customers lent crypto for monthly interest. On 14 February 2022 it settled with the SEC and 32 US states for $100 million, with regulators finding the accounts were unregistered securities and that BlockFi had made materially false and misleading statements about their risks. It survived that, but not the fall of FTX, to which it was financially exposed: after FTX collapsed in November 2022, BlockFi paused withdrawals on 10 November 2022 and filed for Chapter 11 on 28 November 2022. Its story shows two failure modes at once — a product regulators considered mis-sold, and contagion from another firm’s collapse.

What the collapse teaches

The lessons are painfully consistent. A big brand and heavy safety marketing tell you nothing about solvency. High advertised yields were a symptom of the risk that killed these firms, not a reward. Deposits were not insured, so customers became unsecured creditors owed cents on the dollar, recovered slowly through bankruptcy. And in every case, the moment customers most wanted their coins was the moment they could not get them — because handing over your keys to earn a yield means trusting someone who may not be able to give them back.

None of this means every provider today is a fraud, and the market and its rules have changed since 2022. But it does mean the burden of proof sits with any platform offering to pay you a yield, and that “this time it’s different, this one is safe” is exactly what was said last time. Read the record, keep it in mind, and size any risk accordingly.

Who the failures hurt, and how

The people hurt most were ordinary retail customers, not sophisticated funds, and the mechanism of the harm matters. Many had been told, in plain marketing language, that these were safe places to earn “interest” on their savings, and had moved significant portions of their net worth in. When withdrawals froze, they could not react — the decision to lock the doors was made by the platform, not the depositor. Then, in bankruptcy, they discovered their legal position: not protected depositors, but unsecured creditors near the back of the queue, behind secured lenders and the costs of the bankruptcy itself. Recoveries came slowly, over years, often as a fraction of the balance and sometimes paid partly in company equity or a mix of assets rather than the coins originally deposited. For people who had believed they were saving, the reframing to “creditor in a corporate insolvency” was both financial and psychological.

There was a cruel timing element, too. Because the collapses came in a falling market, many customers were locked in while the value of their trapped coins fell further, unable to sell or move to safety. Some also faced tax complications on rewards they had been credited earlier in the year but could no longer access. The overall picture is of a harm that compounded: frozen access, falling prices, a weak legal position, and a slow, uncertain recovery, all landing on people who had been reassured that the risk was small.