Hello readers, 2022 was a particularly turbulent year for the crypto industry — the year of the looming "crypto winter" — as prices fell and major players collapsed. Starting in May, the implosion of TerraUSD, a stablecoin, started a chain reaction that led to the downfall of companies like Three Arrows Capital, Voyager Digital, Celsius Network, and BlockFi, before the sudden and surprising collapse of the FTX exchange. Let's not forget about the Ethereum merge, Coinbase insider trading charges, and the upcoming crypto regulations worldwide. The list of events is long. However, I have compiled major highlights in crypto this year. I hope you guys will enjoy it. Happy Holidays from the Inside Crypto team!  | |  Gia | |
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 Terra Labs, a top crypto project by market capitalization, collapsed in May, wiping out $60B from the crypto space. Sister coin UST, an algorithmic stablecoin pegged to the U.S. dollar, lost its peg and came crashing down to a low of $0.30, a fall of more than 70%. More: - On May 7, over $2B in TerraUSD (UST) was unstaked, and millions of U.S. dollars were liquidated from the platform.
- The massive outflow of funds caused the price of UST to fall from $1 to $0.91. As a result, market players started trading $0.90 in UST for $1 in LUNA.
- The UST was moved out, causing it to lose its 1:1 peg against the USD; the Terra ecosystem eventually collapsed.
- The value of LUNA fell from an all-time high of $119.51 to $0.
- An arrest warrant was issued for Do Kwon, whose whereabouts are still unknown; his passport was suspended. However, he is reportedly registered as a resident in Serbia.
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 The Ethereum merge was successful in September, switching from proof of work (PoW) to an energy-efficient proof of stake (PoS) network. The concept of the merger was planned seven years ago and was finally completed this year and was under a test period of almost two years. More: - The merge event was watched by more than 41,000 people at its peak and even had a theme song with the lyrics "carbon footprint all gone." Ethereum co-founder Vitalik Buterin wrote on Twitter:
- "And we finalized! Happy merge all."
- Ethereum is home to 3,500 active decentralized apps. The benefits of the merge include the following:
- Ethereum's energy consumption declined by 99% due to the merger.
- Ether properties also changed to resemble yield-bearing securities.
- Staked Ether will generate a 5.2% return.
- The user experience on the network will remain the same.
- The upgrade will make the network cheaper and faster.
- "This is the first step in Ethereum's big journey toward being a very mature system," Buterin said.
- At the same time, crypto exchanges like Binance and Coinbase suspended Ether activity during the merge event to prevent hacks and bugs.
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 FTX filed for bankruptcy proceedings in November following massive withdrawals on the exchange. Sam Bankman-Fried admitted fault at the collapse of the platform and says that he is "sorry," admitting that he "f---ed up" and "should have done better." More: - FTX was worth $32B earlier this year and now faces bankruptcy; before his subsequent arrest, Bankman-Fried was looking to raise $3B to $4B in equity and some debt financing to help navigate the financial situation.
- The platform experienced $6B in withdrawals over a 72-hour period; Bankman-Fried tried securing $8B in emergency funding to help the company weather the flood of withdrawals on the platform.
- The Bloomberg index highlights that Bankman-Fried and all other FTX exchange investors were likely to be "wiped out," and the exchange collapsed in a matter of days.
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 FTX agreed to acquire BlockFi for $240M during the summer as the company attempted to acquire more distressed assets during the crypto winter. The acquisition did not go as planned, and BlockFi eventually filed for Chapter 11 bankruptcy following the collapse of FTX. More: - FTX agreed to acquire BlockFi at a maximum price of $240M based on meeting certain performance targets; The company did not reveal the official minimum deal price.
- BlockFi also took a $250M loan from FTX during the recent market downturn, which was increased to $400M.
- BlockFi had $257M in cash, with an estimated $1B to $10B in assets and liabilities.
- The largest creditors include West Realm Shires Inc., the business name for FTX US, which has a $275M unsecured claim.
- The company was looking to go public by next year, but it was liquidated due to FTX's fall.
- FTX offered loans to several companies during the crypto winter, including Voyager with $500M.
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Voyager Digital, a crypto lender, filed for Chapter 11 bankruptcy due to "volatility and contagion." Bankrupt crypto hedge fund Three Arrows Capital also defaulted on its loan. Voyager had previously suspended withdrawals, deposits, and trading on its platform. More: - In the U.S., a Chapter 11 bankruptcy filing allows the debtor to plan a reorganization to keep the business alive and pay creditors over time. Voyager has over 100,000 creditors. Assets and liabilities are listed at between $1B and $10B.
- Crypto hedge fund Three Arrows Capital (3AC) failed to make payments on 15,250 BTC and $350M on USDC.
- Voyager's value declined 98% from its peak, and shares plunged 42%, dropping its market value to $48.8M from $1.99B at the start of 2022.
- Voyager had secured a $485M credit line from Alameda in mid-June; Bankrupt Alameda Research linked to FTX is the biggest unsecured creditor shown on the bankruptcy filing, with a $75M unsecured loan.
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Sam Bankman-Fried, the former FTX CEO, was arrested by Bahamian authorities and later flown to the USA, where he awaits his trial. He was released to his parents on $250M bail; he faces charges including wire fraud, money laundering, and violating campaign finance laws in the U.S. More: - Bankman-Fried was arrested shortly after 6 p.m. at his condo complex in the Bahamas and cooperated during the arrest.
- SBF is facing charges including wire fraud, conspiracy, securities fraud, securities fraud conspiracy, and money laundering, marking the first move to hold individuals involved in the FTX legally liable.
- The U.S. Securities and Exchange Commission also filed civil charges for misleading investors and defrauding customers.
- SEC Chair Gary Gensler said, "We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto."
- "I didn't knowingly commit fraud ... I didn't want any of this to happen. I was certainly not nearly as competent as I thought I was," SBF told the BBC.
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 |  | Gia Mattu is based in Calgary, Alberta. She is an entrepreneur with experience in climate technology, drones, AI, machine learning, and blockchain technology. When she's not working, she loves to hike the Canadian Rockies, try new cuisine, and travel. | | | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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