January 27, 2023

From an outside perspective, 2022 has been a roller coaster ride for crypto. The market reached a total valuation of $3 trillion during the 2021 bull market before scaling back to its current level of around $810 billion. While this poor performance can be partly attributed to the pervasive macroeconomic environment – ​​exacerbated by, among other things, rising inflation rates and the ongoing conflict between Ukraine and Russia – the role the recent wave of insolvencies has played on the sector cannot be denied.

That said, below is a list of arguably the most notable heroes and villains who have made an undeniable impact on this rapidly evolving industry over the past year.

The heroes

Changpeng Zhao

At a time when some of the biggest players in crypto were crumbling, Changpeng Zhao, also known as “CZ”, kept his Binance crypto exchange afloat and even played a role in the collapse of its closest rival, FTX.

CZ has refused to bind the crypto exchange to the regulatory framework of one or more countries. As a result, governments around the world are not too thrilled with Binance’s approach and are repeatedly pressuring the exchange with regulatory requests. However, despite the ongoing stress, Binance has grown in influence and stature. Amid a harsh crypto winter in which staff layoffs were rife, CZ claims to have made no major layoffs, with the exchange even looking to hire more people in the short term.

Finally, CZ’s digital presence has grown over the past year, with a global Twitter following of over 8 million. In addition, the Canadian entrepreneur recently announced that he has invested a whopping $ 500 million in Twitter.

Brian Armstrong

It has been an up and down year for Coinbase CEO Brian Armstrong, with the company laying off several employees while its share price fell significantly. Despite the setbacks, however, he kept his chin up. Throughout the year, Armstrong was an outspoken critic of the U.S. Securities and Exchange Commission and its chairman, Gary Gensler, to claim the SEC has stifled innovation by forcing crypto entities to adhere to extreme reporting requirements. He was also critical of the US Treasury Department’s sanctions of Tornado Cash’s smart contract addresses, promising to fund a lawsuit to overturn the government’s actions.

Armstrong’s commitment to decentralization and transparency was fully reflected again earlier this year when he announced that Coinbase would rather shut down its Ether (ETH) staking services than censor sanctioned Ethereum transactions.

Senators Cyntia Lummis and Kirsten Gillibrand

While some lawmakers are oblivious to 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 introduced a bill called the Lummis-Gillibrand Responsible Financial Innovation Act, which proposes a comprehensive framework for managing digital currencies. The bill was introduced in response to the SEC’s lack of clarity in the space and separates cryptocurrencies into three categories: commodities, securities, and ancillary assets.

The bill notes that cryptocurrencies categorized as commodities must 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 has expressed strong support for the crypto industry over the past year. Recently, the politician pointed to SEC Chairman Gary Gensler’s crypto oversight strategy, which he called “arbitrary and inconsistent.” Furthermore, 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, Bucket called for Gensler to testify before Congress and explain his criticized regulatory approach. He also added: “Him [Gensler] refused to provide Congress with the information requested in the letter, which would have 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 much-anticipated transition to a proof-of-stake consensus layer finally came to fruition earlier this year. Known as the Merge, it marked the first time a project the size of Ethereum successfully completed a technical maneuver of this scale.

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

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The villains

Sam Bankman Fried

It is no surprise that this name is on the list. Sam Bankman-Fried, the former CEO of FTX, recently spearheaded 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 led by his close associate Caroline Ellison.

Since his arrest by Bahamian authorities on December 12, Bankman-Friend’s future has been 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 December 22 and released on $250 million bail. Many pundits have continued to speculate about his future and whether SBF will now spend the rest of his days in prison, 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. At 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 received support from mainstream companies such as Korean ticket company Ticket Monster and travel company Yanolja.

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

In September, the Seoul South District Prosecutor’s Office announced that it had initiated proceedings to revoke Kwon’s passport while putting his name on Interpol’s red list. Despite the seriousness of the situation, Terra’s co-founder seems to make little to no effort to hide from the authorities.

Su Zhu and Kyle Davies

Three Arrows Capital (3AC) was founded in 2012 by Su Zhu and Kyle Davies. Before the collapse, it reportedly had $18 billion in assets. In March, blockchain analytics firm Nansen suggested that 3AC alone managed about $10 billion in crypto. However, speculation about unsecured loans arose as early as the first quarter of 2022.

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Before falling out of favor, Davies and Zhu had become household names in the crypto space, with Zhu amassing over 500,000 Twitter followers. 3AC had interests in several popular projects, including Aave, Avalanche, Luna, Deribit, and Ethereum. As of July 2022, the crypto hedge fund’s bankruptcy filings show that the company owes $3.5 billion to creditors.

Finally, it should be noted that Zhu and Davies lost more than $3 billion in 2021 and 2022, 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, one of the largest crypto lending platforms in the world. In June, Celsius abruptly froze client withdrawals, swaps and transfers, citing client safety and extreme volatility. Soon after, the company filed for Chapter 11 bankruptcy, revealing a $1.2 billion gap in its accounts.

At the time of its demise, Celsius had $4.3 billion in assets, with losses estimated at $5.5 billion. Just a 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 customer funds were frozen, Maskinsky’s Celsius was one of the most prominent players in the crypto market, with over $8 billion in customer loans and nearly $12 billion in assets under management. The company had more than 1.7 million customers, each of whom was offered a return of up to 17% on their crypto deposits.

Stephen Ehrlich

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

To make matters worse, all of the company’s loans were included in an investor call just weeks before the company’s collapse, with documents showing that the loans had been covered in small increments. Other red flags worth noting include an allegation from the US Federal Deposit Insurance Corporation that Voyager falsely claimed the agency was insuring it. At its peak, Voyager had a whopping $5.8 billion in deposits in its treasury. More recently, Binance has expressed its intention to buy out the troubled company.

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