Five reasons bitcoin had its worst quarter in more than a decade

The U.S. Federal Reserve raised interest rates to fight inflation. There are fears of a recession in the U.S.

High growth technology names have been hit by it. The second quarter was the worst of the last six years for the tech-laden index.

The price movement of the U.S. stock index has been correlated with the price of the digital currency. The stock sell-off has had a negative effect on the market.

The collapse of the stable coin terraUSD and sister token luna sent shock waves through the industry.

Stable coins are pegged to a real-world asset. It was supposed to be pegged to the U.S. dollar. Real assets are backed by some stable coins. There was a system of burning and minting coins.

The system didn't work. The demise of associated token luna was caused by TerraUSD losing its dollar peg.

Three Arrows Capital, which had exposure to terraUSD, saw its value plummet after the episode.

Customer withdrawals were paused in June.

Users could get yields of more than 18% if they deposited with Celsius. It lent the money to the players in the market who were willing to pay high interest rates.

The model was put to the test. The reason for pausing withdrawals was cited.

Celsius said in a post that it was taking important steps to preserve and protect assets.

Pursuing strategic transactions as well as a restructuring of our liabilities are included in these options.

The issues with Celsius exposed the weakness in the lending models used in thecryptocurrencies industry.

Three Arrows Capital is a hedge fund that focuses on investing in cryptocurrencies.

The decade-old firm, also known as 3AC, started by Zhu Su and Kyle Davies, is known for its high leverage bullish bets on thecryptocurrencies.

3 AC had exposure to the collapsed stable coin terraUSD.

People familiar with the matter told the Financial Times that U.S.-based Blockfi and Genesis had sold some of 3AC's positions. 3AC couldn't meet the margin call after borrowing from BlockFi.

An investor has to commit more funds in order to avoid losses on a trade made with borrowed money.

3AC failed to repay a loan worth more than $600 million.

A person with knowledge of the matter told CNBC that Three Arrows Capital fell into insolvency.

The 3AC situation has exposed the high levels of leverage in the industry.

The customer account that went into negative equity was one of the reasons why CoinFlex halted customer withdrawals last month.

The customer is accused of owing the company $47 million. Ver, who is also known as "Bitcoin Jesus" for his evangelical views of the industry in its early days, denies that he owes any money.

Normally, an account that goes into negative equity would have its positions wiped out. There was an agreement between Ver and CoinFlex that prevented this from happening.

To raise $47 million so it can resume withdrawals, and to offer 20% interest for investors willing to buy and hold the digital coin, CoinFlex issued a new token called Recovery ValueUSD, or RVUSD.

The company is talking to a number of distressed debt funds to buy the token, according to CEO Mark Lamb. The funds from Ver are being sought by Coin Flex.