Crypto Three Things (7/11)

1) BlockFi investors brace for shakeup: Investors in troubled crypto lender BlockFi are gearing up for a possible wipeout to some of their holdings after Private Shares Fund slashed the valuations of the firm’s Series E warrants to $0 from $67 in April. The fund, which oversees investments in late-stage companies, also marked down BlockFi’s preferred shares to $20 apiece, down from $77 two months ago. BlockFi reached a deal with FTX, evaluating the company at $680M, a steep drop from its prior price tag of $3B in March.

Titan’s Takeaway: BlockFi reached a valuation that spiraled out of conventional metrics and into a stretched representation of overly ambitious crypto prospects – a vote of confidence that was reversed when the tide went out.

2) Celsius taps new restructuring law firm: Nearly a month after crypto lender Celsius locked users out of their accounts, the embattled crypto company hired lawyers from Kirkland & Ellis LLP to navigate the restructuring process. The new law firm, which also provides restructuring services to another struggling lender Voyager Digital, replaced Akin Gump Strauss Hauer & Feld LLP. Since it shut its door, Celsius continues to be tight-lipped about whether it will make holdings available to their owners.

Titan’s Takeaway: The selloff in digital assets has triggered a string of liquidations among undercollateralized crypto lenders. This chain reaction spotlighted the risks of using platforms that guarantee unusually high yields.

3) Europe regulator speaks out on latest crypto tumult: The European Securities and Markets Authority expressed concerns over the recent cryptocurrency slide and urged retail participants to heed a “cautionary lesson” when investing in these assets. The financial watchdog cast doubt over the likelihood of survival for many of the crypto projects and said there was no prospect of a European bailout for investors that lose their money in this volatile market.

Titan’s Takeaway: There will be bad actors in any market, but broad-stroke crypto regulations are a requirement to protect investors and good-faith companies.