In what turned out to be a year of recovery for cryptocurrency prices, and although there was perhaps less bad news compared to 2022, the world of cryptocurrencies is never without its fair share of drama. If you weren't glued to Crypto Twitter all year like we were, here are some highlights.
dcg drama
When the Winklevoss twins launched Earn, to offer customers an 8% return on borrowed cryptocurrencies, they turned to Genesis, a subsidiary of Digital Currency Group. But when Genesis went bankrupt, Earn's clients were left out of money. Soon, the Winklevosses' crypto exchange, Gemini, was embroiled in a dispute with Digital Currency Group CEO Barry Silbert. Through a series of open letters, Cameron and Tyler accused Silbert of corporate misconduct and said that Genesis owed Gemini more than a billion dollars. In September, DCG lawyers proposed a new bankruptcy plan that would give Earn clients between 95% and 110% of what they were owed after Genesis declared bankruptcy. In October, New York Attorney General Letitia James sued Gemini and DCG for allegedly defrauding investors.
Banks explode
In March, Silicon Valley Bank became one of the largest US-based financial institutions to collapse since 2008, a failure that caused instability and contagion in the sector. Five more banks demolishedincluding crypto-compatible Silvergate Bankwhich served an increasing number of renowned clients such as Coinbase and FTX. With the majority of its deposits linked to the sector, when cryptocurrency prices fell and FTX crashed, Silvergate was killed by a bank run. Days later, another cryptocurrency-friendly bank, Signature, was shut down by New York state regulators. Other institutions such as First Republic Bank and Citizens Bank also collapsed in 2023.
make kwon
After months on the run after $40 billion implosion of its TerraUSD algorithmic stablecoin, former Terraform Labs CEO Do Kwon was arrested in March along with his company's former CFO. The 32-Year-Old, Trash-Talking Crypto Entrepreneur Who Often Criticized "the poor" on X/Twitter, was caught with several fake passports while trying to flee Montenegro for Dubai. the plea not guilty to accusations of attempting to use false travel documents. Later, a higher court invested a proposed bond of โฌ400,000 (about $435,000 at the time) which left Kwon trapped in jail. In June, he was sentenced to four months in prison and has remained in custody while Montenegro's top judicial official weighs extradition requests from both the The United States and Kwon's native South Korea. Kwon appealed a ruling by a Montenegrin court that would allow his extradition, but the Wall Street Journal reported that Kwon will likely still be extradited to the US.
NFTs hit bottom, even with the emergence of ordinals
NFTs were among the biggest winners of the previous bull market that fueled Cryptocurrency prices reach all-time highs.. This year was a different story. In the third quarter, NFT trading volume had fallen to $1.39 billion, compared to more than $12 billion in the first quarter of 2022, according to DappRadar data. In January, a new type of NFT on the Bitcoin network called Ordinals sparked a trading frenzy. Since then, more than 49 million have been created, according to to the dune. A series of new actors, including NFT Market Blur, have also transformed the NFT business by introducing incentives and reducing fees to threaten the former dominant leader OpenSea. To compete, OpenSea stopped imposing royalties on creators, causing significant reaction among NFT artists. In November, Blur and its competitor OKX were responsible for just over two-thirds of NFT trading activity, while OpenSea sat at about 10%โAlthough it still has the largest number of active merchants. In November, OpenSea laid off half of his staff-and then held a company retreat in a mansion.
Easy Come Easy Go
This year, billions of dollars flowed into digital assets, but on the other hand, several once-powerful industry leaders fell by the wayside. In November, Fortune reported that Wormhole raised $225 million in the largest cryptocurrency-related funding round of the year, from investors including Arrington Capital and Jump Crypto. All investors got token warrants instead of shares. The increase, which was technically the first although it has been incubated by Skip crypto For years, he valued Wormhole at $2.5 billion. (Special mention is also made of Worldcoin, an eye-scanning identity-based blockchain company co-founded by OpenAI CEO Sam Altman, which raised $115 million in May.) On the other side of that coin, around $1.7 billion was stolen from crypto projects in total this year, which was a large sum but still less than the estimated $4 billion hackers made off with last year. past, according to TRM Labs. Some of the biggest hacks were exploits worth around $100 million each that affected the cross-chain bridge. multichainloan application Euler Financeand the Poloniex Crypto Exchange.
Legal victories
After years of court battles with the Securities and Exchange Commission, crypto companies Ripple and Grayscale scored victories against the regulator this summer. In July, a federal judge ruled that the XRP token closely tied to Ripple was It is not a security when sold in the Open market through crypto exchanges. The judge also gave the SEC a partial victory by ruling that Ripple's institutional sales constituted unregistered securities offerings, but some experts and many on Crypto Twitter touted the result as an overall victory for the industry as a whole. A federal judge ruled in October that the SEC could not appeal the decision, and the agency later charges dropped against two company directors. Grayscale also got a boost after a federal court said the SEC was โarbitrary and unfoundedโ by not accepting the company's request to create a spot Bitcoin ETF, opening the door to possible approval for similar ones financial instruments next year. The judge presiding over the case pointed to the SEC's approval of futures-based Bitcoin ETFs as evidence of the agency's decision. inconsistency. The regulator chose do not appeal failure.
SBF
In November, Sam Bankman-Fried, the former White knight of cryptography, it was pleaded guilty of seven charges related to the collapse from crypto exchange FTX and its sister company Alameda Investigation. At its peak, FTX was valued at about $32 billion, but, as revealed during its more than month-long trial, SBF and its top executives (several of whom testified against him) misappropriated billions of dollars of client assets to finance risky transactions in Alameda and purchase luxury real estate, among other things. SBF, whose sentencing is scheduled for March, is now awaiting a second trial about whether he used client money to try bribing Chinese government officials.
CZ and Binance
For over a year, Binance, the world's largest crypto exchange and its founder Changpeng โCZโ Zhaohave been low scrutiny of US regulators and law enforcement authorities. In November, the company reached an agreement with the Justice Department and two other federal agencies in which he agreed to pay a $4.3 billion fine and plead guilty to violating U.S. money laundering and economic sanctions laws. Zhao resigned as CEO and also pleaded guilty to money laundering charges. He will have to stay in the US until the date of his sentence. In a separate deal with prosecutors, the former Binance CEO agreed to pay a $50 million fine. The company's former chief compliance officer agreed to pay a $1.5 million fine. As part of the Binance deal, the company will have to accommodate two court-appointed supervisors who will monitor the business and determine if it complies with US law.
Bitcoin ETFs from the big guys
Bitcoin Spot ETFs Already Exist in Europe and Canadabut for years the SEC has been adamant about not approving one, citing the possibility of market manipulation as a reason to reject dozens of applications. (Cameron and Tyler Winklevoss, from Social network fame, first tested in 2013.) Still, in recent months, momentum has begun to turn against the regulator as more TradFi companies file their own applications. While Grayscale, which runs the The largest Bitcoin trust in the world.has been fighting the SEC in court to push to convert GBTC into a spot Bitcoin ETF, companies like BlackRock and Fidelity have been launched with their own applications. After Grayscale's court victory over the SEC, some analysts predict that the first Bitcoin spot ETFs could be approved in early January, which could inject hundreds of billions of dollars of entries into the crypto market.
Is crypto winter over?
Bitcoin started the year in just over $16,000. As 2023 draws to a close, the most popular cryptocurrency is up 157% so far this year, trading at a 20-month high. Starting in mid-October, Bitcoin took off from $26,000 rangewhere it had been stagnant for months, breaking above the $40,000 level in December before some liquidations. (It's still a long way from its all-time high of about $69,000 in fall 2021.) Among the highlights that have driven Bitcoin up in recent months are the election of a pro-crypto president in Argentina, judicial victories against the SEC for Grayscale and rippleand crypto comments from Larry Fink, CEO of BlackRock. Still, the biggest cause of Bitcoin's recent rally is investor speculation that the SEC could soon approve an avalanche of spot Bitcoin ETFs.
