The crypto industry has seen a tumultuous year in 2022, with several significant currencies and exchanges experiencing major setbacks. As the industry looks towards the future, it is important to reflect on the major breakdowns that have occurred this year. In this article, we will take a closer look at some of the biggest disappointments for investors in the crypto community.
One of the most significant setbacks of the year was the hack of Ronin Bridge, a blockchain used in the popular play-to-earn game Axie Infinity developed by Sky Mavis. In March 2022, threat actors successfully stole approximately $625 million in Ethereum (173,600) and USDC (25.5 million). The developer of the game confirmed the breach on Twitter, and in April, the firm raised $150 million to reimburse victims.
Another major downfall was the fall of Terra (LUNA), which saw its price fall by over 99% overnight. This dramatic crash resulted in investors losing a combined $60 billion due to panic selling, as related tokens Terra USD Classic (USTC) and LUNA Classic (LUNC) also declined. The founder and CEO of Terraform, Do Kwon, started a rehabilitation plan for LUNA, but four months later, a South Korean court issued an arrest warrant for him and five other members for allegedly violating regional market rules.
Another major failure was the collapse of Three Arrows Capital (3AC), a crypto hedge fund that borrowed a large sum of money, around $2.3 billion. The firm lent this money to major crypto giants and invested with many regulators, but ultimately, the firm was headed towards bankruptcy because it could not pay back its lenders, triggering a downward spiral that impacted many crypto investors.
Another crypto exchange, FTX, also experienced a major collapse in 2022. FTX, one of the world’s largest Bahamas-based crypto exchanges launched in 2019, collapsed on November 11, 2022. The exchange filed for bankruptcy, and the CEO resigned from his post. The value of FTX before its collapse was $32 billion, but the exchange fell to zero after it was revealed that the former CEO and other insiders had used billions of dollars in customer funds for various criminal practices.
Finally, BlockFi, a New Jersey-based digital asset lender founded in 2017, filed for bankruptcy on November 28, after two weeks of the FTX collapse. In a court filing, BlockFi mentioned that the firm owes money to more than 100,000 creditors, with assets and liabilities listed as between $1 and $10 billion. The company sold one of its crypto assets to fund its bankruptcy in early November.
In conclusion, 2022 has been a challenging year for the crypto community, with several significant currencies and exchanges experiencing major setbacks. Investors may be looking for better opportunities in the coming year, but the failures of this year can serve as a valuable lesson for new platforms to learn from the mistakes of their predecessors.