Summaries of the Top Crypto Moments in 2022
The year 2022 was quite a negative turning point for the global cryptocurrency market, with a huge boom turning into a catastrophic collapse and the fall of numerous crypto empires. Millions of investors saw their life savings and hard-earned money disappear as a result of the unfortunate circumstances, which caused some businesses to fail and others to declare fast bankruptcies.
This string of tragic occurrences was caused by a combination of factors, including the market crash as well as greed and exuberance, which took hold before spectacularly collapsing.
This applies not only to the cryptocurrency market, which has fallen by more than 50% since its peak in 2021 but also to the US stock and bond markets, which have fallen by more than 15% and 20%, respectively. 2022 also saw the most well-known cryptocurrency, Bitcoin (BTC), fall to a 2-year low of under $16,000.
Now, let’s take a quick look at the top moments — both positive and negative — that we all witnessed in the cryptocurrency market in 2022.
2022’s Top Crypto Events
The Merge
While the crypto industry experienced a number of crises and failures in 2022, we still saw a number of advancements in the core technology, as several newly designed blockchains, were debuted alongside additional layer-two networks and advances in zero-knowledge technology.
However, the biggest event was The Merge, which migrated Ethereum, the second largest cryptocurrency after Bitcoin, from the energy-intensive proof-of-work (PoW) consensus mechanism to the environmentally friendly proof-of-stake (PoS) mechanism. According to the Ethereum Foundation, this switch reduced Ethereum’s energy use by about 99.95%.
Multiple Hacks
2022 also served as the biggest year ever for hacking operations, from phishing scams to malicious payload breaches to smart contract vulnerabilities and bridge hacks. Over two billion dollars worth of cryptocurrency has been stolen just this year through a variety of cyberattacks. One of the most significant hacks occurred on October 6, when hackers stole $566 million in BNB by exploiting the Binance Chain blockchain, which is owned by the largest cryptocurrency exchange in the world. Another example was the Nomad bridge, which enables users to transfer digital assets between various blockchains but lost all of its funds stored in various tokens after hackers exploited a flaw in its upgrade.
Aside from other incidents throughout the year, there were also hacking incidents in December alone, including BIT Mining Limited, which lost over $2 million; Defrost Finance, which lost over $100k (though the funds were later recovered); and BitKeep decentralized wallet users, who lost over $8 million in a fake app theft. However, it is not always easy for financial regulators to track down and prosecute these scammers because they frequently use decentralized “mixing services” to conceal their stolen funds.
To further prevent this, the U.S. Treasury sanctioned Tornado Cash, a cryptographic protocol and mixing service, for its alleged role in laundering billions of dollars in cryptocurrency after the Ronin Network, a blockchain system that runs the popular NFT game Axie Infinity, announced that hackers stole $625 million in funds. This was the largest crypto heist of both 2022 and all time.
To check the overall amount of money stolen by hackers in the blockchain ecosystem, check this report.
The Collapse of Terra LUNA/UST
Four years of ascent to influence and power in the cryptocurrency world for Terra Network and its founder, Do Kwon, came to an end in a devastating fall from grace in May. The Terra Luna ecosystem, which includes the Luna coin and the UST stablecoin, suffered a crash estimated to be worth $60 billion, causing the global digital currency market and its players to tremble.
The then-$18 billion algorithmic stablecoin TerraUSD (UST), which was intended to keep a $1 peg, started to sway and dropped to 35 cents, while its sister token, LUNA, which was intended to stabilize UST’s price, dropped from $80 to a few cents.
Nearly every cryptocurrency company that invested in these coins was forced to collapse. Since then, several accusations have been made against the ecosystem and its employees, but Do Kwon, the chief founder, has not been found despite occasionally tweeting to his one million-plus followers.
The Collapse of the Three Arrows Capital
Unfortunately, Three Arrows Capital (3AC) was one of the crypto empires that fell as a result of the collapse of the Terra ecosystem, as was to be expected. Three Arrows Capital (3AC), a crypto hedge fund, fell after suffering significant losses as a result of the collapse of LUNA and Terra, as it held a significant position in the two assets, totaling approximately $560 million at its peak.
Thus, it was found that 3AC owes more than $3 billion, with $2.3 billion of its loans going to Genesis, which is also its largest creditor. The hedge fund’s fallback on debts also contributed to the financial ruin of Celsius Network, Voyager Digital, and other once-leading cryptocurrency platforms.
FTX/Alameda Fall
The abrupt collapse of the SBF-led FTX, one of the most significant crypto exchanges in history, is arguably the biggest and most painful of all. This all began when Changpeng Zhao, or “CZ,” the CEO of the competing Binance exchange, announced on Twitter that he was dumping FTX’s native token, FTT, and expressing concern about the exchange’s financial situation. Sam Bankman-Fried (SBF) attempted to reassure customers that FTX was “fine” in response, but it appeared too late to prevent the business from collapsing as the exchange experienced unprecedented user withdrawal requests that far exceeded the funds it had in reserves at the time.
To be safe, a lot of people were withdrawing their funds to other exchanges and personal wallets. The situation didn’t appear to be that bad, though, until withdrawals were altered on November 8.
However, the exchange’s CEO later admitted defeat and stated on Twitter that his company was in the process of being acquired by Binance, resulting in a further decrease in the value of FTT. Binance suddenly abandoned the deal while SBF stepped down as the CEO, which caused the empire to completely crumble.
A few days later, FTX filed for bankruptcy, and many users are still waiting to know the fate of their investments, although multiple lawsuits are still going on.
BlockFi Bankruptcy
This is one of the tens (if not hundreds) of businesses that were forced out of business in 2022 by the collapse of FTX, Alameda Research, and the volatility of the cryptocurrency market. The collapse of FTX caused a massive contagion, which led to the BlockFi crypto exchange and lender filing for Chapter 11 bankruptcy on November 28.
It stated in its bankruptcy filing that it had significant exposure to FTX and Alameda Research. According to estimates, the failed company owed more than 100,000 creditors between $1 billion and $10 billion.
Other Notable Events in 2022
- NFTs trading volume hit its peak of $17 billion in January
- Russia invaded Ukraine, resulting in enormous crypto donations to the affected country
- The Central African Republic (CAR) recognized Bitcoin (BTC) as a legal tender
- Virgil Griffith, the former developer of Ethereum sentenced to 63 months in jail.
- Tesla sells 75% of its Bitcoin holdings
- The US annual inflation rates increased from 3.2 percent in 2011 to 8.3 percent in 2022
- Massive job cuts in the crypto and tech industries
- Many countries tried out their native CBDC stablecoins
- Decentralized finance (DEFI) gained increased trust among crypto users
- India imposes 30% taxes on proceeds from cryptocurrency trading.
- El Salvador’s Bitcoin adoption got criticized after the market plummeted
- Multiple cryptocurrency influencers face legal charges and fines
- Three crypto bosses died surprisingly
Closing Thoughts
The underlying technology of decentralization and Bitcoin, the most popular cryptocurrency, are here to stay and to alter the world, despite the very tragedic occurrences that the global crypto market witnessed in 2022. 2023 is another year and we anticipate that more patterns will persist next year, particularly the tremendous transition from centralized players to a truly transparent decentralized system.
