Terra

Trading on major exchanges spiked following collapse of Terra, FTX: BIS report

The report suggests that whales with Binance, FTX and Coinbase “probably cashed out at the expense of smaller holders” by reducing their BTC stockpiles as retail investors bought.

A report from the Bank for International Settlements (BIS) suggests that trading activity on major exchanges increased in the days following the collapse of crypto firms FTX and Terraform Labs.

In a Feb. 20 bulletin on “crypto shocks and retail losses,” the BIS reports that while the price of Bitcoin (BTC), Ether (ETH) and other currencies dropped in 2022, the number of daily active users at some exchanges including Coinbase and Binance “increased markedly” following news of the collapse of Terra and FTX. The bank suggested that “users tried to weather the storm” by moving their investments into stablecoins and other tokens likely not looking bearish at the time.

Source: BIS

In contrast, the BIS reported that whales at the aforementioned exchanges “probably cashed out at the expense of smaller holders” by reducing their BTC stockpiles as retail investors bought crypto. The bank said analysts had looked at the number of downloads of crypto investment apps, noting that roughly 75% of users had downloaded an app when BTC was more than $20,000 and assuming each user bought $100 in BTC the first month and each subsequent month.

Related: BIS-funded regulator to probe DeFi entry points like stablecoins

“Data on major crypto trading platforms over August 2015–December 2022 show that […] a majority of crypto app users in nearly all economies made losses on their bitcoin holdings,” says the BIS report. “The median investor would have lost $431 by December 2022, corresponding to almost half of their total $900 in funds invested since downloading the app.” The bank adds:

“While the crypto collapse may have affected individual investors, the aggregate impact on the broader system was limited.”

The market crash of 2022 has had industry leaders and regulators speak out on various concerns, from the lack of oversight at a major exchange like FTX to how the crypto market could grow to have the potential to impact traditional financial markets. In the United States, several bankruptcy cases are underway for firms including FTX, Celsius Network and Voyager Digital, while authorities have been moving forward with criminal charges against former FTX CEO Sam Bankman-Fried.

The fate of dollar-pegged stablecoins in question: Law Decoded, Feb. 13–20

The United States Securities and Exchange Commission (SEC) ordered Paxos Trust to stop issuing Binance USD. That could affect the whole stablecoins ecosystem.

New week, a new element of the crypto ecosystem is under attack. This time, the United States Securities and Exchange Commission (SEC) ordered Paxos Trust to stop issuing Binance USD (BUSD) — a dollar-pegged stablecoin. Paxos received a cease order from the New York Department of Financial Services (NYDFS).

With no other choice, Paxos announced that from Feb. 21, it would end its relationship with Binance for the branded U.S. dollar-pegged stablecoin BUSD. All existing BUSD tokens will remain fully backed and redeemable through Paxos Trust Company until “at least February 2024.” Customers can redeem their funds in U.S. dollars and convert their BUSD tokens to another Paxos-issued stablecoin, Pax Dollar (USDP). At the same time, the company “categorically disagreed” with the SEC’s opinion that BUSD is a security.

From disregarding the issue as “FUD” to calling it an attack against the Binance exchange, crypto community members laid down various theories on the allegations that BUSD is an unregistered security. Crypto analyst Miles Deutscher expressed the most obvious point of bewilderment — nobody expects profit when purchasing a stablecoin.

The situation may have far-reaching repercussions for the stablecoins in general. As Binance CEO Changpeng Zhao has already hinted, the industry may drop the American dollar as a peg currency altogether, switching to the euro, yen or Singapore dollar. However, some experts believe the scrutiny of Paxos was not a direct attack on stablecoins but preventive action against Paxos in particular.

SEC sues Do Kwon and Terraform Labs for fraud

The SEC has filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “orchestrating a multi-billion-dollar crypto asset securities fraud.” According to the agency, Kwon and Terraform offered and sold an “inter-connected suite of crypto asset securities, many in unregistered transactions.” Kwon, a South-Korean national, is currently at large and believed to be in Serbia after leaving his residence in Singapore sometime in September 2022 following a Seoul court issuing an arrest warrant for him. Interpol reportedly issued a Red Notice for Kwon to law enforcement worldwide later in September.

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Russia to roll out CBDC pilot with real consumers in April

The Bank of Russia is preparing to roll out the first consumer pilot for the nation’s central bank digital currency (CBDC) on April 1, 2023. The upcoming CBDC pilot will involve real operations and real consumers in Russia but will be limited to a certain number of transactions and customers. Following the first pilot stage, the Bank of Russia plans to determine how to scale the digital ruble further. The news comes amid some Russian officials claiming that the Bank of Russia is considering a gold-backed token targeting cross-border transactions.

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Kansas state lawmakers look to cap crypto political donations at $100

The topic of campaign donations in crypto is undoubtedly something that will come up before the next electoral cycle in the United States. Still, Kansas state lawmakers are eager to address it beforehand. According to a new bill, no person would be allowed to make or accept crypto contributions of more than $100 for any political candidate in the state’s primary or general election. For donations under $100, the receiver would need to “immediately convert” the crypto to U.S. dollars, not use the crypto for expenditures and not hodl the funds.

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Yield platform Stablegains sued for promoting UST as a ‘safe’ investment

The now-shuttered stablecoin yield platform is being sued for customer losses after allegedly funneling customer funds into Anchor Protocol without users’ knowledge or consent.

Decentralized finance yield platform Stablegains has been sued in a Californian court for allegedly misleading investors and failing to comply with securities laws.

On Feb. 18, plaintiffs Alec and Artin Ohanian filed a complaint in the U.S. District Court for the central district of California, alleging that the shutteredDeFi platform diverted all of its customer funds to the Anchor Protocol without their knowledge or consent.

Anchor Protocol offered yields of up to 20% on the Terraform Labs algorithmic stablecoin, Terra USD (UST).

“As an early supporter of and investor in TFL [Terraform Labs], Stablegains is intimately familiar with UST and LUNA. In fact, Stablegains, Inc. falsely advertised UST as a safe investment.”

Stablegains offered a 15% gain for its customers, pocketing the difference from yields offered by Anchor Protocol.

The plaintiffs also allege that UST was a security and that Stablegains broke federal securities laws:

“Stablegains plainly failed to comply with federal and state securities laws. Stablegains failed to disclose that UST is in fact a security.”

The complaint added that the firm failed to register with the U.S. Securities and Exchange Commission either as a securities exchange or as a broker-dealer.

The Ohanians stated that there were “disastrous consequences for Stablegains’ customers,” following the collapse of the UST ecosystem in May. UST de-pegged from the dollar, causing a broader run on DeFi and crypto markets in May and an eventual loss of around $18 billion from the Terra/Luna ecosystem.

Following the collapse, Stablegains allegedly altered its website and promotional material touting UST as “safe” and “fiat-backed,” effectively conceding that UST was none of those things, the complaint stated.

Instead of liquidating assets and returning funds to customers, Stablegains “retained the majority of the devalued assets deposited by its users, unilaterally opting to redirect them into Terra 2.0,” it added.

Stablegains, which launched in August 2021, shut down on May 22. It discontinued its services, apps and support for Anchor Protocol, requesting that users withdraw their funds. As reported by Cointelegraph, Stablegains was hit with a similar lawsuit at the time.

Related: SEC sues Do Kwon and Terraform Labs for fraud

The specific amount sought in damages was not detailed, however, the plaintiffs did demand a trial.

On Feb. 16, the SEC filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.”

Do Kwon removed 10K Bitcoin from Terra after collapse — Takeaways from SEC complaint

The SEC complaint included allegations around claims of TerraUSD’s peg, Terra’s relationship to Chai, and co-founder Do Kwon cashing out for millions.

A complaint filed by the United States Securities and Exchange Commission said Terra co-founder Do Kwon and Terraform Labs laundered more than $100 million worth of Bitcoin from the platform following its collapse in May 2022.

According to the SEC complaint filed in the U.S. District Court for the Southern District of New York on Feb. 16, Kwon and Terraform have transferred more than 10,000 Bitcoin (BTC) from the platform and the Luna Foundation Guard to a cold wallet, then to a Swiss bank account to convert to fiat. The financial regulator said that the Terra co-founder and his company might have access to more than $100 million in cash since withdrawals started in June 2022.

In addition to identifying the stockpile of Bitcoin, the SEC said Kwon and Terra artificially restored TerraUSD’s (UST) dollar peg — the stablecoin had been one of the largest by market capitalization at the time the platform collapsed. According to the complaint, the platform solicited a third party to purchase “massive amounts of UST to restore the $1.00 peg” when it dropped below $1 in May 2021, misleading investors as to its stability and reliability:

“UST’s price falling below its $1.00 ‘peg’ and not quickly being restored by the algorithm would spell doom for the entire Terraform ecosystem, given that UST and LUNA had no reserve of assets or any other backing.”

The SEC also claimed several of the tokens involved in the collapse of Terra were “crypto asset securities” falling under its regulatory purview. According to the SEC, these tokens included UST, LUNA and wrapped LUNA, as well as MIR tokens and mAssets developed under Terra’s Mirror Protocol.

“Defendants solicited investors for these crypto assets by touting their profit potential,” said the SEC. “Defendants repeatedly stated that the crypto assets would increase in value based on Terraform’s development, maintenance, and promotion of its blockchain, protocols, and the entire Terraform ecosystem.”

Terra’s business connections were also a target of the financial regulator, as the SEC reported Chai — a South Korean payment app linked to Terra at the time — “did not process or settle transactions on the Terraform blockchain.” Rather, Terra allegedly reported transactions “that had already happened in the real world using Korean Won” while claiming to the public that Chai transacted on the blockchain.

“In at least five instances between October 2021 and March 2022, there were one or more days when no transactions whatsoever were confirmed on the Terraform blockchain,” said the SEC. “Yet, there is no evidence that the Chai payment application was not functioning during those periods.”

Related: ‘Wild’ — SEC going after Terra sparks responses from crypto lawyers

Kwon has continued to be active on his Twitter account following the collapse of Terra despite many crypto users blaming him for their loss of funds and the seeming “ripple event” leading to multiple bankruptcies amid the crypto crash of 2022. South Korean authorities reportedly sent two officials to Serbia in an attempt to track down the Terra co-founder. At the time of publication, Kwon’s location i unknown.

Tether CTO Paolo Ardoino on taking the bull by the horn

Stablecoins may have suffered an identity crisis in 2022, but Tether chief technology officer Paolo Ardoino is bullish about the utility the sector provides.

Stablecoins have been under much scrutiny since the implosion of the third-largest stablecoin by market cap, TerraUSD (UST), in May 2022. The UST saga led to a lot of skepticism that caused consumers to question the safety of stablecoins. 

In the seventh episode of Hashing It Out, Cointelegraph’s Elisha Owusu Akyaw (GhCryptoGuy) interviews Paolo Ardoino, Tether’s chief technology officer, about how stablecoins work, and the two discuss frequently asked questions about stable tokens.

Fear, uncertainty and doubt (FUD) rocked the boats of stablecoin issuers after TerraUSD depegged in 2022. Tether was one such issuer at the receiving end of the FUD. Ardoino claimed that some of the FUD was being spread privately and publicly by competitors. Nevertheless, the Tether chief technology officer said that the FUD only served to improve trust between consumers and the company.

“I like the FUD so much because we can respond to it with facts.”

One such fact was the ability of the company to withstand the pressure that came as a result of panic in the market. Ardoino pointed out that Tether was able to process $7 billion in redemptions in 48 hours, which was 10% of the company’s reserves. According to him, it was an achievement that will be recorded in the history books of global finance.

On how to ensure that the industry does not again end up in a situation similar to what happened with TerraUSD, Ardoino argued that developers should stick to making stablecoins the traditional way and avoid the more experimental algorithm-based method. He believes that algorithmic stablecoins are inefficient and unsafe.

Related: Bitcoin advocate Najah Roberts explains why BTC is a tool for empowerment

Furthermore, Ardoino mentioned that algorithmic stablecoins might work only in instances where the stablecoin is heavily collateralized with more proven cryptocurrencies like Bitcoin (BTC) instead of cryptocurrencies issued by the same developers building the stablecoin.

“The problem with Terra was that their backing was a token they also created. Tether’s backing is the U.S. treasury bills, is the U.S. economy, so you cannot have traders attacking us because we have all the reserves.”

In the episode, the two also discuss:

  • How stablecoins work
  • Algorithmic stablecoins vs. traditional stablecoins
  • The TerraUSD deppeging saga
  • Use cases of stablecoins in developing economies
  • Tether Peso and Tether Gold
  • “Stablecoins war”: Tether (USDT) vs. USD Coin (USDC) vs. Binance USD (BUSD)
  • Stablecoin regulation
  • Central bank digital currencies vs. stablecoins

Listen to the full episode on Spotify, Apple Podcasts, Google Podcasts, or TuneIn to get all the insights on stablecoins and Tether. You can also check out Cointelegraph’s catalog of shows on the new Cointelegraph Podcasts page.

Terra lending protocol Mars to launch mainnet

The Mars Hub will launch an independent Cosmos application chain and issue MARS to users who hold the token during the two snapshots on Terra Classic.

The original Terra lending protocol, Mars Hub, has announced it will launch its independent Cosmos application chain on Jan. 31, as well as issue MARS tokens to users who hold it during two snapshots on Terra Classic.

According to a Jan. 20 statement, the Mars Hub mainnet will go live with 16 genesis validators, including Block Pane, Chill Validation, Chorus One, Cosmology, CryptoCrew Validators, ECO Stake and others. An additional 34 slots for permissionless validators will be available post-launch.

A total of 50 million MARS tokens will be delegated to genesis validators for the launch and returned to the community pool one month later. “This temporary delegation will help protect the network from attack by a rogue validator that could potentially accumulate a large delegation of MARS shortly after genesis and begin manipulating transactions on-chain,” the statement said.

The mainnet debut is the third and last phase of a three steps process that began with a private testnet for developers and some community members, followed by a public testnet. The first Mars outpost will follow on the Osmosis blockchain in early February.

Related: BIS proposes research model to study DeFi’s integration with TradFi and its risks

MARS tokens will be made claimable by eligible addresses via an airdrop that goes live with the mainnet, unlocking 64.4 million tokens for those who held MARS during the two historical snapshots on Terra Classic. A snapshot is a file with the recording state of a blockchain at a particular time, including all existing address and transactions data.

MARS tokens distribution was determined by snapshots taken before and after the depeg of Terra Class USD (UST): block 7544910 (May 7, 2022, ~11 a.m. Eastern Time), and block 7816580 (May 28, 2022, ~11 a.m. EST).

The tokens will be available for six months after the launch via Station, Terra’s new interchain wallet. Users who held MARS on Terra Classic will also inherit governance power.

The collapse of Terra (LUNA) and its stablecoin, TerraUSD (UST), in May had a wide impact on crypto markets, hammering the prices of decentralized finance (DeFi) projects hosted on the Terra protocol, such as Mars Protocol.

Albright Capital drops lawsuit against Terraform Labs and Do Kwon

Terraform Labs is the founder of US Dollar Terra (UST), an algorithmic stablecoin that lost its peg in May.

Albright Capital has dropped its lawsuit against Terraform Labs and its founder Do Kwon, according to a Notice of Voluntary Dismissal filed in U.S. District Court on January 9. Before its dismissal, the lawsuit had alleged that the company had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by operating the stablecoin, UST, as a “Ponzi scheme.”

Three Arrows Capital (3AC) co-founder Su Zhu posted the dismissal to Twitter, saying:

Zhu had previously claimed that the bankruptcy of 3AC was partially caused by UST’s collapse. The lawsuit was dismissed “without prejudice,” meaning that the plaintiff has the option to refile it in the future if desired.

Related: Terra accidentally airdropped tokens to the wrong person

In a statement to Cointelegraph, a Terraform Labs spokesperson struck a triumphant tone in regard to the dismissal, saying:

In another victory for Terraform Labs, the plaintiff in Albright v. Terraform Labs voluntarily dismissed the case after it was demonstrated that he had sustained no injury. From the moment the Terra ecosystem was attacked and UST depegged, TFL has been adamant that neither the company nor its principles committed any wrongdoing[…]The intervening months have confirmed that the facts are on our side, and more are and will continue to come to light.

US Dollar Terra (UST) was an algorithmic stablecoin created by Terraform labs. It ran on the Terra network, whose native coin was LUNA. UST was backed by an equivalent dollar amount of LUNA as collateral, and each UST coin was supposed to be pegged to $1 on the secondary market. However, LUNA collapsed in value in May, causing UST to become undercollateralized. UST lost its peg as a result and is now worth only $0.02 per coin.

South Korean authorities issued an arrest warrant for Kwon in September, and the company has faced multiple lawsuits alleging that UST was a fraud. This particular lawsuit alleged that UST “amounted to a Ponzi scheme that was only sustained by the demand for UST created by Anchor’s excessive yields.” However, the lawsuit has now been dismissed by the plaintiff.

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Terra accidental airdrop leads to smear campaign, community member claims

TFL claimed that the airdrop receiver refused to return the funds, while the user claimed that he was on the verge of settlement with the firm when the former decided to run a smear campaign.

Terraform Labs (TFL), the firm behind the now defunct algorithmic stablecoin TerraUSD (UST) and its co-founder Do Kwon are back in the limelight for allegedly running a smear campaign and issuing threats against one of their community members.

It all started in May 2022 with the genesis airdrop planned after the original ecosystem imploded in the wake of its stablecoin depeg. In a series of tweets, TFL claimed that Jimmy Le, a community member entrusted with Terra funds, has refused to return funds gained during the genesis airdrop.

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The tweets noted that the newly minted token, Terra (LUNA), was airdropped to individuals holding the original native token, now called Terra Classic (LUNC). However, an error with CW3 multisig wallets resulted in individual signers receiving LUNA airdrops they should not have.

TFL claimed that all other multisig singers returned the accidental airdrop except for Le, who, despite their best efforts, is yet to cooperate with them.

Le, the individual accused of not returning the accidental airdrop, responded to the TFL Twitter thread on Jan. 9 and accused them of running a smear campaign against him. He said the firm has deliberately chosen to present one side of the story and lied about their interactions. He claimed that he did not refuse to return the accidental airdrop but wanted to make sure about the tax implications because of the tokens he had received.

Related: 10 crypto tweets that aged like milk: 2022 edition

He also clarified that he transferred the liquid portion of the airdrop (around $1-1.5 million) to the multisig wallet specified by TFL and none of the airdropped tokens has ever been undelegated or sold. But later, he discovered that the chain upgrade did not reset his vesting balances to the community pool but enabled the manual transfer of vesting tokens to the community pool. This made him revisit his tax concerns.

Le claimed that tax-related conversations with TFL continued until December 2022, before TFL suddenly posted the Twitter thread on Jan. 6. He claimed that the smear campaign caught him off guard because they were in the process of a settlement.

He also allegedly shared personal messages from TFL co-founder Kwon threatening him with various consequences, including personal safety. One of the messages read:

“Just make it right. It’s not worth the hassle and endangerment this will bring to your life and/or reputation going forward. That’s all I’m gonna say anymore on the subject. I will NOT be involved in hunting you down btw. I don’t care that much. Just thought I’d give u heads up. Good luck. You’ll prob need lots of it if you try to abscond.”

The clarification from Le and the alleged messages from Kwon riled up the crypto community, especially Fatman, a Twitter handle dedicated to the Terra fiasco.

Fatman lauded Le and took a potshot at Kwon, saying that someone who tried illegally selling United States securities and is on the run from Interpol should not threaten others for getting legal and tax advice. He added, “don’t take financial advice from Do Kwon. It’s always the right play.”

Cointelegraph reached out to TFL, Kwon and Le to get more clarification on the issue, but they didn’t respond by the time of publication.

Bitcoin bears well positioned for Friday’s $2.5 billion options expiry

BTC bears are outnumbered based on open interest volume, but bulls’ hopes of $20,000 before 2023 have already been hampered.

A year-end wager for $80,000 Bitcoin (BTC) might seem entirely off the table now, but not so much back in March as BTC rallied to $48,000. Unfortunately, the two-week 25% gains that culminated with the $48,220 peak on March 28 were followed by a brutal bear market.

It is important to highlight that the U.S. stock market likely has driven those events, as the S&P 500 index peaked at 4,631 on March 29 but traded down 21% to 3,640 by mid-June.

Moreover, that date roughly coincides with the crisis at centralized cryptocurrency lender Celsius, which halted withdrawals on June 12, and the insolvency of venture capital firm Three Arrows Capital on June 15.

While the fear of an economic downturn has undoubtedly triggered the cryptocurrency bear market, the reckless mismanagement of centralized billion-dollar entities is what sparked the liquidations, pushing prices even lower.

To cite a few of those events, TerraUSD/Luna collapsed in mid-May; crypto lender Voyager Digital imploded in early July; and the second-largest exchange and market marker, FTX and Alameda Research, filed for bankruptcy in mid-November.

In addition, the quasi-tragical sequence of events hit unsuspected victims, including publicly-listed mining companies such as Core Scientific, which was forced to file for Chapter 11 bankruptcy on Dec. 21. Despite the bulls’ best efforts, Bitcoin has not been able to post a daily close above $18,000 since Nov. 9.

This movement explains why the $2.47 billion Bitcoin year-end options expiry will likely benefit bears despite being vastly outnumbered by bullish bets.

Most bullish bets targeted $20,000 or higher

Bitcoin broke below $20,000 in early November when the FTX collapse began, taking year-end option traders by surprise.

For instance, a mere 18% of the call (buy) options for the monthly expiry have been placed below $20,000. Thus, bears are better positioned even though they placed fewer bets.

Bitcoin options aggregate open interest for Dec. 30. Source: CoinGlass

A broader view using the 1.61 call-to-put ratio largely favors bullish bets because the call (buy) open interest stands at $1.52 billion against the $950 million put (sell) options. Nevertheless, as Bitcoin is down 19% since November, most bullish bets will likely become worthless.

For instance, if Bitcoin’s price remains below $17,000 at 8:00 am UTC on Dec. 30, only $33 million worth of these calls (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $17,000 or $18,000 if it trades below that level on expiry.

Bears could secure a $340 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Dec. 30 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

  • Between $15,000 and $16,000: 700 calls vs. 22,500 puts. The net result favors bears by $340 million.
  • Between $16,000 and $17,000: 2,000 calls vs. 16,500 puts. The net result favors bears by $240 million.
  • Between $17,000 and $18,000: 7,500 calls vs. 13,600 puts. Bears remain in control, profiting $110 million.
  • Between $18,000 and $19,000: 12,100 calls vs. 11,300 puts. The net result is balanced between bulls and bears.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

Bitcoin bulls need to push the price above $18,000 on Dec. 30 to flip the table and avoid a potential $340 million loss. However, that movement seems complicated considering the ongoing pressure for U.S. regulation and fears of insolvency at the biggest exchanges, despite the recent proof-of-reserves effort.

Considering the above, the most probable scenario for the Dec. 30 expiry is the $15,000-to-$17,000 range providing a decent win for bears.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Santas and Grinches: The heroes and villains of 2022

Here’s a list of the 12 individuals who had the most impact — for better or worse — on the crypto industry this past year.

From an outside perspective, 2022 has been a rollercoaster ride for crypto. The market reached a total valuation of $3 trillion during the bull market of 2021, only to scale back to its current level of around $810 billion. While this poor performance can be partly attributed to the pervading macroeconomic environment — compounded by rising inflation rates and the ongoing Ukraine-Russia conflict, among other factors — one cannot deny the role that the recent slew of insolvencies has had on the sector. 

That said, below is a list of arguably the most notable heroes and villains who have undeniably impacted this rapidly evolving industry over the past year.

The heroes

Changpeng Zhao

At a time when some of the biggest players in crypto crumbled, Changpeng Zhao, also known as “CZ,” ensured that his Binance crypto exchange held its own, even playing a role in the collapse of its closest rival, FTX.

CZ has refused to tie down the crypto exchange to the regulatory framework of one country or several. As a result, governments across the globe aren’t too big on Binance’s approach and repeatedly pressure the exchange with regulatory requests. However, despite the continued stress, Binance has grown in influence and stature. Amid a harsh crypto winter when staff layoffs were commonplace, CZ claims to have not made any major layoffs, with the exchange even looking to hire more people in the near term.

Lastly, CZ’s digital presence has grown over the past year, with a worldwide Twitter following of more than 8 million. Moreover, the Canadian entrepreneur recently announced that he has invested a whopping $500 million in Twitter.

Brian Armstrong

It’s been an up-and-down year for Coinbase CEO Brian Armstrong, with the firm laying off several employees while experiencing a significant drop in its stock price. However, despite the setbacks, he has continued to keep his chin up. All through the year, Armstrong has been a vocal critic of the United States Securities and Exchange Commission and its chairman, Gary Gensler, claiming the SEC has stifled innovation by forcing crypto entities to adhere to extreme reporting requirements. He was also critical of the sanctions of Tornado Cash’s smart contract addresses by the United States Department of Treasury, pledging to fund a lawsuit to annul the government’s actions.

Armstrong’s commitment to decentralization and transparency was once again on full display earlier this year when he announced that Coinbase would rather halt its Ether (ETH) staking services than censor sanctioned Ethereum transactions.

Senators Cyntia Lummis and Kirsten Gillibrand

While some lawmakers remain oblivious toward the crypto market, Senators Cynthia Lummis and Kirsten Gillibrand have taken the time to understand the true financial and social potential of this rapidly maturing technology.

Earlier this year, the pro-crypto duo tabled a bill called the Lummis-Gillibrand Responsible Financial Innovation Act, proposing a comprehensive framework for the governance of digital currencies. The bill was put forth in response to the SEC’s lack of clarity in the space and segregates cryptocurrencies into three categories: commodities, securities and ancillary assets.

The bill notes that cryptocurrencies categorized as commodities should be regulated by the Commodity Futures Trading Commission, with the SEC responsible for securities and ancillary assets.

Representative Tom Emmer

Representative Tom Emmer is another voice who relayed strong support for the crypto industry this past year. Recently, the politician pointed to SEC Chair Gary Gensler’s crypto oversight strategy, calling it “indiscriminate and inconsistent.” Moreover, he revealed that since January, he has been approached by the heads of several prominent crypto entities who have complained to him that Gensler’s reporting requirements are onerous and unfair, calling them unnecessary and biased against the crypto market.

In a recent tweet, Emmer called for Gensler to testify before Congress and explain his criticized regulatory approach. He also added that “He [Gensler] declined to provide Congress with the information requested in the letter, which would’ve informed Congress of the apparent inconsistencies in Gensler’s approach that caused him to miss Terra/Luna, Celsius, Voyager, and FTX.”

The entire Ethereum core development team

After years of delays, Ethereum’s highly anticipated transition to a proof-of-stake consensus layer finally came to fruition earlier this year. Known as the Merge, it was the first time a project of Ethereum’s size successfully completed a technical maneuver of this scale.

More than 100 developers worked on making the network’s transition from the energy-intensive proof-of-work consensus layer to proof-of-stake a seamless reality.

Click “Collect” below the illustration at the top of the page or follow this link.

The villains

Sam Bankman-Fried

It’s no surprise to see this name on the list. Sam Bankman-Fried, the former FTX CEO, was recently at the helm of one of the largest crypto collapses in recent memory. It is alleged that the MIT graduate was unaware of the inner workings of the relationship between FTX and Alameda Research, a sister company helmed by his close associate Caroline Ellison.

Since his arrest by Bahamian authorities on Dec. 12, Bankman-Friend’s future is unclear. Many people would like to see him and close associates like Sam Trabucco, Gary Wang, Constance Wang and Nishad Singh punished for their alleged crimes. Bankman-Fried was extradited to the United States on Dec. 22 and released on a $250 million bail bond. Many pundits have continued to speculate on his future and whether SBF will now be spending the rest of his days in jail, quite possibly with many of his close associates.

Do Kwon

Another person on the list is Do Kwon, co-founder of Terra, a blockchain platform designed to make payments more efficient. Upon its launch, Terra’s algorithmic stablecoin, TerraUSD (UST), attracted 40 million users, with the project raising $32 million from investors, including Arrington XRP Capital and Polychain Capital. It also won support from mainstream companies like Korean ticketing firm Ticket Monster and travel operator Yanolja.

Following Terra’s collapse, a whopping $45 billion of capital was wiped from the crypto market within seven days. It is estimated that the crash affected more than 200,000 South Korean investors, leading several groups to file a class-action lawsuit against Kwon. The South Korean government recently revealed that it is pursuing criminal charges against Kwon, with similar lawsuits filed against him in the United States and Singapore.

In September, the Seoul Southern District Prosecutors’ Office announced that it had started proceedings to revoke Kwon’s passport while placing his name on Interpol’s red notice list. Despite the gravity of the situation, the Terra co-founder seems to be making little to no effort to hide from authorities.

Su Zhu and Kyle Davies

Three Arrows Capital (3AC) was founded in 2012 by Su Zhu and Kyle Davies. Before its collapse, it reportedly had $18 billion in assets. In March, blockchain analytics firm Nansen suggested that 3AC managed about $10 billion in crypto alone. However, speculation about uncollateralized borrowing emerged as early as Q1 2022.

Related: 5 cryptocurrencies to keep an eye on in 2023

Before their fall from grace, Davies and Zhu had become well-known names in the crypto space, with Zhu amassing more than 500,000 Twitter followers. 3AC had stakes in several popular projects, including Aave, Avalanche, Luna, Deribit and Ethereum. As of July 2022, the crypto hedge fund’s bankruptcy filings show the firm owes $3.5 billion in creditors’ claims.

Lastly, it should be noted that throughout 2021 and 2022, Zhu and Davies lost more than $3 billion, putting 3AC’s collapse on the list of the most significant hedge-fund trading losses of all time.

Alex Mashinsky

Alex Mashinsky is the founder and former CEO of Celsius Network, which was one of the largest crypto lending platforms in the world. In June, Celsius abruptly froze customer withdrawals, swaps and transfers, citing client safety and extreme volatility. Shortly after, the company filed for Chapter 11 bankruptcy, revealing a $1.2 billion hole in its accounts.

At the time of its downfall, Celsius had $4.3 billion in assets, with losses estimated at $5.5 billion. Just one month before Celsius filed for bankruptcy, Mashinsky withdrew more than $10 million in cryptocurrency. Several other company executives — including former strategy chief Daniel Leon and technology chief Nuke Goldstein — were also found to have taken similar actions.

Before freezing customer funds, Maskinsky’s Celsius was one of the most prominent players in the crypto market, holding over $8 billion in client loans and almost $12 billion in assets under management. The firm had more than 1.7 million customers, with each being offered returns of up to 17% on their crypto deposits.

Stephen Ehrlich

Stephen Ehrlich is the founder and CEO of cryptocurrency brokerage Voyager Digital. Days after the Celsius bankruptcy, Voyager announced that it would be halting all customer withdrawals and trading. It filed for Chapter 11 bankruptcy four days later. It soon became apparent that one of the reasons for Voyager’s collapse was a staggering $670 million loan to 3AC.

To make matters worse, all of the company’s loans were included in an investor call just a few weeks before the company’s collapse, with documents showing that the loans had been collateralized in tiny portions. Other red flags worth highlighting include an accusation by the United States Federal Deposit Insurance Corporation that Voyager illegally claimed the agency insured it. At its peak, Voyager had a whopping $5.8 billion in deposits in its coffers. More recently Binance outlined its intention to buy out the troubled company.

The past year has been rocky for the industry. As the new year approaches, can the market bounce back even stronger and forge a better future for all its participants? Time will tell.