Unpacking the 2022 crypto credit crisis and its parallels with the 2008 financial crisis by analyzing Three Arrows Capital's collapse, FTX's implosion, and more
The crypto financial crisis of 2022 — Apparently the way it works is that if you blow up a big crypto firm …
BloombergMatt Levine
Context & Ripple Effects
The 2022 credit crisis was already visible in the failure chain from Three Arrows Capital to Voyager: Voyager’s interest-bearing deposit model unraveled after 3AC defaulted. Related coverage also identifies TerraUSD, leverage, and 3AC-driven contagion as defining features of the crypto winter. FTX’s implosion broadened that crisis from a borrower-default episode into a wider test of crypto finance’s internal credit links.
Later coverage characterized the episode as a crisis within a largely self-contained crypto financial system, arguing that long-term legitimacy depends on uses beyond finance. The 2008 comparison matters here as a lens on how leverage and interconnected counterparties can turn individual failures into systemwide stress.
First-order effects
Three Arrows Capital’s collapse directly impaired creditors such as Voyager, whose lending-funded deposit business depended on repayment from major borrowers.
FTX’s implosion added another major failure to an already stressed crypto credit market, intensifying the crisis examined in the article.
Second-order effects
Crypto lenders and brokers relying on leveraged counterparties face greater pressure to demonstrate the resilience of their loan and deposit structures after the Voyager failure chain.
The TerraUSD collapse, excess leverage, and 3AC contagion make counterparty exposure—not just asset-price declines—the central competitive and risk-management issue for crypto-finance operators.
Third-order effects
If crypto firms continue to build primarily interconnected financial products, failures at major intermediaries can remain capable of transmitting stress across the sector.
The episode strengthens the crypto legitimacy gap: durable adoption will depend on proving utility outside the financial system that produced the crisis.
The trend: Crypto is confronting a shift from growth through internally financed, leveraged products toward a test of whether it can establish utility beyond speculative finance.
4. “CZ's tweet destroyed FTX” No healthy business can be destroyed by a tweet. However, there was a tweet that may have, Caroline's tweet 16 minutes after mine on Nov 6. Data shows it was the real cause for people to dump FTT: https://www.bloomberg.com/...
@felixsalmon
Felix Salmon on x
Monday's @matt_levine column is, on a purely substantive level, possibly the best I've ever read. The insight here is off the charts. Don't neglect the footnotes. https://www.bloomberg.com/...
@cz_binance
@cz_binance on x
3 “SBF had good intentions, but just made some mistakes.” Lying is never with good intentions.
@blockchain_bri
Brian Mahoney on x
Recommend this post by @matt_levine today for those who'd like to understand the flows behind CeFi & the impact on crypto markets- GBTC, private sales, and lending platforms discussed interestingly, there are quite a few parallels with 2008 and tradfi... https://www.bloomberg.com…
@samebjones
Sam Buckingham-Jones on x
‘Maybe in six months all the busted crypto leaders will be saying “oh wow we should not have given all those interviews”.’ https://www.bloomberg.com/...
@tkarlo
Tom Karlo on x
“Crypto shadow banks did not manufacture safe assets out of risky investments; they just relabeled the risky investments as safe assets.” https://www.bloomberg.com/...
@florianmkern
Florian M. Kern on x
The critical difference between the subprime and the crypto crisis: In subprime, more mortgages defaulted than anticipated and thus fewer cash flows came in - in crypto, there were no cash flows to begin with. Matt Levine: https://www.bloomberg.com/... https://twitter.com/...
@patio11
Patrick McKenzie on x
Today's Money Stuff title: “Crypto had a credit bubble.” Self-recommending: https://www.bloomberg.com/... https://twitter.com/...
@cz_binance
@cz_binance on x
2 “FTX was killed by xyz (ie, a 3rd party)” No, FTX killed themselves (and their users) because they stole billions of dollars of user funds. Period.
@carnage4life
Dare Obasanjo on x
I love @matt_levine's take that crypto is speed running all the lessons of traditional finance and we're now at “Don't give interviews if you committed financial crimes” which they won't fully have learned for a few more months. https://www.bloomberg.com/...
@trengriffin
Tren Griffin on x
Anything Matt Levine writes is self-recommending. “Crypto Had a Credit Bubble” Apparently if you blow up a big crypto firm, you have to sit in your home in a crypto-friendly jurisdiction giving long rambling interviews about your failures..." https://www.bloomberg.com/...
@matt_levine
Matt Levine on x
There are lots of ways that one could have done this newsletter in a responsible way. Clearly what we did was not one of them. https://www.bloomberg.com/...
@silvermanjacob
Jacob Silverman on x
I'd change “weird blip” and “no reason” to “market manipulation” and “coordinated pump.” I'd like to know who did the MobileCoin trade on FTX. https://www.bloomberg.com/... https://twitter.com/...
@trengriffin
Tren Griffin on x
Matt Levine: Some people said: “'Look, this is great, but what we really need are safe 18% yields.' The real lesson of 2008 was if you package risky products into a safe product, that's when the really bad stuff happens.” https://www.numlock.com/... 👇👇👇 https://twitter.com/...
@katie_martin_fx
Katie Martin on x
US bank Silvergate has defended its role in accepting deposits for Sam Bankman-Fried's conglomerate, saying it conducted “extensive due diligence” on crypto exchange FTX and trading shop Alameda Research. https://www.ft.com/...
@hkanji
Hussein Kanji on x
We conducted extensive due diligence on FTX and Alameda Research https://www.sec.gov/...
@eliotwb
Eliot Brown on x
We did extensive due diligence on company that didn't have a CFO, bank says https://twitter.com/...