From Terra to Bankman-Fried: The 9 Biggest Crypto Stories of 2022
The outgoing year has been a doomed year for the digital asset world: stability concerns outweighed risk appetite, BTC plunged 64% as interest rate hikes made investors think twice about such risky assets, and the resounding collapse of FTX, Celsius and Three Arrows Capital finally shattered confidence. to cryptocurrencies, writes Business Insider.
Let’s take a look at the main events that shook the crypto world this year.
1. A sharp drop in prices for cryptocurrencies influenced by investor anxiety due to rising interest rates
Cryptocurrency prices began to fall in January as the Federal Reserve began raising interest rates to fight inflation. When the rate rises, holding cash becomes more attractive than investing in assets such as stocks, real estate, and cryptocurrencies. In January alone, Bitcoin fell 19% and Ethereum fell 29%.
2. Cryptocurrency heavyweights like Coinbase (NASDAQ:COIN) and FTX featured in Super Bowl LVI ads
As digital assets soar in 2021, many major crypto exchanges such as Coinbase, Crypto.com and FTX have started spending millions of dollars on big sports sponsorship deals in the fight for customers. And in particular, one of the famous American football players, Tom Brady, also happened to be one of the most famous patrons of the FTX exchange. However, by the end of the year, crypto companies had drastically reduced their sports advertising spending as they faced a sell-off in the market, and FTX’s partnerships with the Miami Heat, Mercedes F1 and Tom Brady became worthless after the company went bankrupt.
3. TerraUSD stablecoin lost its $1 peg and its child token Luna crashed to zero
In May 2022, the Terra stablecoin lost its peg to its $1 fixed price. Pegging a crypto asset to a stable reserve asset such as gold or government currency gives crypto investors more security to hold money in times of uncertainty. However, as early as May 7, an active sale of UST began, when crypto investors sold about $2 billion, which broke its peg to the dollar. After that, it fell sharply in price and a few days later it was trading below 10 cents. At the same time, the price of the Luna token plummeted from an all-time high of $119.51 to zero in just a few days. This resulted in a $20.5 billion loss for crypto investors in just one week.
4. Celsius Network has frozen the funds of all its clients
The founder and CEO of the crypto-lending company, Alex Mashinsky, has repeatedly said that he hates banks, and in June announced a freeze on all customer withdrawals, as the company faced problems caused by “extreme market conditions,” more precisely, high market volatility. Following the announcement, Bitcoin fell 15% to below $23,000 and the group’s own token, cel, fell by a third to 21 cents.
5. BTC fell below $20,000
In total for this year it has decreased by 64%. The drop below $20,000 occurred in June, for the first time since 2020. Investors see the $20,000 level as a key psychological level for bitcoin, which signals a meaningful direction for the leading cryptocurrency.
This is due to the fact that in 2017, bitcoin rose sharply to around $20,000, setting an all-time high at the time. But then in 2018, it experienced a series of crashes that took its price below $4,000. Its fall could not but have an impact on the rest of the market: the price of ethereum also held just above $1000, while the altcoins solana and polkadot traded 90% below the record levels of 2021.
6. Three Arrows Capital Hedge Fund Defaulted On A Loan And Was Liquidated
Crypto company Three Arrows Capital, also known collectively as “3AC”, defaulted on bitcoin loans from lender Voyager Digital and was liquidated by the court on June 27. But that was just the beginning: the liquidation of Celsius and 3AC saw a $33 billion decline in the value of the cryptocurrency market. The effects of the collapse spread throughout the industry: Voyager filed for bankruptcy a few weeks later, and trading firm Genesis suffered hundreds of millions of dollars in losses because it borrowed 3AC cryptocurrency.
7. FTX Filed for Bankruptcy After a Soliciency Crisis Amid Selloff of Its Native Token
Major cryptocurrency exchange FTX filed for bankruptcy in November when CoinDesk reported that FTX sister trading firm Alameda Research held a significant portion of its portfolio in the exchange’s native token, FTT. Within a few days, the price of FTT fell from $22 to $1, causing a solvency crisis for FTX. The crypto group was forced to file for bankruptcy on November 17 after CEO and co-founder Sam Bankman-Fried failed to find a savior and rival exchange Binance pulled out of a similar deal. The horrifying details then came to light: New CEO John Ray III said that in his 40 years of dealing with bankruptcies, he had never seen a company run as badly as FTX. The bankruptcy filing stated that the group’s cryptocurrency assets were worth only $659,000 and the audit was carried out by a little-known firm with an office in the metaverse.
8. Former FTX CEO Sam Bankman-Freed Arrested by Bahamas on Fraud and Money Laundering Charges
FTX co-founder Bankman-Fried was arrested in the Bahamas to be extradited to the United States and face criminal charges of fraud, money laundering and violation of campaign finance laws.
Bankman-Fried was once considered one of the most respected leaders in the cryptocurrency market, promised to cooperate with regulators, donated millions to the election campaign of US President Joe Biden, so his arrest was the end of the months-long collapse of the crypto empire.
9. Crypto exchange Binance tried to reassure investors of its financial strength, but clients withdrew $6 billion
Following the incident with rival cryptocurrency exchange FTX, Binance is also under scrutiny from regulators and the public. In December, the outflow of client funds from its platform reached $6 billion in 72 hours, raising fears that the platform could face a liquidity crisis as its native token, Binance Coin, plummeted in price. To calm the doubters, Binance has engaged the French audit firm Mazars to conduct an audit of cryptocurrency assets. But Mazars has suspended all of its work due to concerns about how its reports will be understood by the public. At the same time, Binance’s financial statements are mostly hidden from the public eye.