The Top 6 Crypto Moments of 2022 with a Long-Term Influence

In 2022, the cryptocurrency market took a beating. The most memorable instances might have a long-term influence on the business. however there were life changing moments.

The Year’s Crypto Moments

If you asked the ordinary person on the street to summarize 2022 in crypto, they’d probably say it was the year the technology died. Thousands of investors who came in inebriated on bull market exuberance last year pledged to leave the space forever when the hangover hit in 2022, but a few diehards stayed.

This was hardly a quiet year for those that did. Sure, the dollar worth of our coins plummeted this year as the sector saw a $2 trillion rout, but there were enough of important events to keep us amused. Or, if not entertained, at least kept busy.

As is characteristic in bear markets, some of the year’s most significant events were also among the most disastrous. Few would disagree that 2022 was one of crypto’s most disastrous years to date. Only a few months apart, Terra, Three Arrows Capital, and FTX all collapsed like dominoes. People suffered enormous losses, and the sector appeared to be set back by years.

Nonetheless, there were a few encouraging developments in 2022. Despite ETH’s poor market performance, Ethereum had a wonderful year as “the Merge” was eventually released. We also saw governments all across the world recognize the promise of cryptocurrency in the face of conflict and surging inflation.

2022 was one of the most turbulent years in crypto history, yet the sector persevered. During the previous bad market in cryptocurrency, it was unclear if the ecosystem would survive. Those that are closely following the space in 2022 have no doubt that crypto is here to stay. Not only are they here to stay, but following this year’s events, the foundations should be stronger than ever in 2023 and beyond.

For the time being, though, the industry is still ruminating on what has been described as a remarkable, if not wholly pleasant, year for the crypto ecosystem.

Canada put the Freedom Convoy funds on hold.

The first major crypto event of 2022 took place in Ottawa, Canada’s capital city, rather than on-chain or even online. On January 22, hundreds of Canadian truckers descended on Parliament Hill from all around the country to protest COVID-19 vaccine requirements and limitations. The so-called “Freedom Convoy” gained control of the streets when the authorities failed to talk with them. Due to the size of the convoy and vehicles, law officials had difficulty removing the demonstrators.

In reaction to the demonstrations, Prime Minister Justin Trudeau invoked the Situations Act on February 14, granting the government temporary exceptional powers to deal to public order emergencies. The Trudeau administration then directed Canadian financial institutions to freeze the bank accounts of demonstrators, as well as anybody who donated to them, in an effort to reduce their funding. Undaunted, the marchers turned to cryptocurrency, prompting Canadian officials to ban at least 34 distinct crypto wallets associated with the Freedom Convoy.

Soon after, a united police force forcibly removed the trucks from the streets; by February 20, Ottawa’s downtown area had been evacuated completely. In terms of the crypto world, the Ottawa demonstrations demonstrated how easily Western democracies may weaponize their banking sectors against their own population. In such environment, Bitcoin’s goal became clear. As an alternative to state-controlled banking, cryptocurrency proponents argue that Bitcoin provides a permissionless, censorship-resistant global payment system.

Despite their flaws, decentralized cryptocurrencies provide an important guarantee: your money is truly yours, and no one can prohibit you from spending it.

Ukraine has begun accepting cryptocurrency donations.

The Russia-Ukraine crisis had a significant influence on global markets this year, including cryptocurrency. The market fell when Russian President Vladimir Putin authorized the Russian military to attack Ukraine, but this was the first conflict in which crypto took center stage.

Within a few days after the invasion, the Ukrainian government’s official Twitter account posted an appeal for Bitcoin and Ethereum donations, along with two wallet addresses. The message quickly caused consternation, with Vitalik Buterin chiming in to warn that the account had perhaps been hijacked. However, the government’s Ministry of Digital Transformation quickly certified that the request was genuine. The Ukrainian government truly requested cryptocurrency to help support its war relief operations. Donations poured in, and the government had raised more than $30 million in BTC, ETH, DOT, and other digital assets in three days. A CryptoPunk NFT was even sent.

The first fundraising drive was only one of the government’s remarkable measures to embrace cryptocurrency amid a crisis. In addition, there was an NFT museum, and UkraineDAO collaborated with the government to raise extra finances and awareness. Because of the West’s sanctions on Russia, crypto came under intense scrutiny during the war, with lawmakers warning that Russian oligarchs would turn to crypto to hide their wealth.

Individuals fleeing Russia flocked to Bitcoin to save their money as the ruble lost value, while big exchanges including as Kraken, Binance, and Coinbase faced requests to restrict Russian citizens in the aftermath of global sanctions. Following EU penalties, the three exchanges reduced their services.

Among the devastation caused by Russia’s invasion on Ukraine, crypto’s participation in the war demonstrated the potential of borderless money more clearly than ever. During a crisis, Internet money was a valuable resource for persons in need. Ukraine’s appeal for cryptocurrency donations was a global first, but it’s reasonable to conclude that other country governments may follow suit in the future.

Biden Issues Crypto Regulation Executive Order

On top of everything else that went wrong last year, authorities throughout the world—particularly in the United States—stepped up their regulatory game to a whole new level. And, to be honest, it’s about time. If we’re being honest, even on its best days, the US government’s approach to regulating cryptocurrencies has been haphazard, and it’s difficult to picture a business pleading, even begging, for a clearer set of laws.

By 2022, it was evident that the executive branch had made no significant concerted effort in determining what digital assets are, let alone how to govern them. Are they investments? Commodities? Something completely different? They may be similar to securities in certain aspects, but like securities in other ways.

Perhaps some of them are commodities, while others are securities, and yet others are currencies… But what are the grounds for making such distinctions? Is Congress looking into it? Who, after all, writes the rules in this part of government? That would be the President.

13 years and three administrations after Bitcoin’s genesis block was mined, President Biden signed an executive order instructing practically all federal agencies, including cabinet departments, to develop detailed plans for crypto regulation and enforcement in the United States. Biden’s directive had been expected for months before it was officially signed in March, and its arrival was widely seen as a windfall to the business. Biden’s order was little more than a research direction, requiring each department to develop a comprehensive strategy and submit it to the White House.

While there is little doubt that a comprehensive crypto regulation is required, the legislative entity with the authority to develop one, Congress, is not showing any urgency. As things are, crypto can only be controlled within the context of the laws as they are now drafted, which is the president’s responsibility. It’s past time for a president to start the ball moving.

Terra Collapses

Terra was once one of the world’s largest cryptocurrencies in terms of market capitalization. Terra experienced a meteoric rise from late 2021 to early 2022, owing primarily to the success of its native stablecoin, UST.

Unlike most stablecoins, UST was not fully collateralized, instead relying on an algorithmic mechanism to maintain parity with the US dollar. Users could create new UST tokens by burning an equivalent amount of Terra’s volatile LUNA coin, or they could redeem UST for new LUNA coins.

Terra’s mechanism aided the blockchain’s rise as crypto users sought refuge in stablecoins to avoid exposure to falling crypto assets at the start of the bear market. Because of Anchor Protocol, a lending platform on Terra, UST was an especially appealing option that provided a 20% yield on UST lending.

As market participants flocked to UST to take advantage of the yield, they burned LUNA more frequently, driving up its price. The rise, combined with Terra frontman Do Kwon’s emphatic social media endorsements, gave the impression that Terra was simply immune to the downtrend. As a result, UST appeared even more appealing.

The Terra ecosystem was worth more than $40 billion at its peak, but the network’s dual token mechanism proved to be its downfall. On May 7, a series of whale-sized selloffs tested UST’s peg, raising concerns before a brief recovery. Two days later, UST lost its peg again, triggering a full-fledged bank run. UST holders rushed to redeem their tokens for LUNA coins, significantly increasing the supply of LUNA and depreciating the coin’s value, prompting even more UST holders to redeem. By May 12 2022, UST was trading at $0.36, while LUNA was trading at fractions of a cent.

The collapse of Terra wiped out the market, but the damage did not stop there. The protocol’s demise triggered a severe liquidity crisis that impacted major players such as Celsius, Three Arrows Capital, Genesis Trading, and Alameda Research. Global lawmakers have also expressed concern about the risks posed by stablecoins, particularly algorithmic ones. Terra was decentralized finance’s biggest failure in many ways, and the fallout from its implosion is still being felt today.

Tornado Cash has been sanctioned by the US Treasury.

Tornado Cash is a privacy-preserving protocol that assists users in concealing their on-chain transaction history. On August 8, the US Treasury’s Office of Foreign Assets Control announced that the protocol had been added to its sanctions list. The agency claimed in a statement that cyber criminals (including North Korean state-sponsored hackers) used Tornado Cash to launder money.

The crypto industry was outraged by the ban. Circle and Infura were among the first to comply with the sanctions by blacklisting Ethereum addresses that had interacted with Tornado Cash. Following suit, some DeFi protocols blocked wallets from their frontends.

Following the announcement by OFAC, the Netherlands’ Fiscal Information and Investigation Service arrested Tornado Cash core developer Alexey Pertsev on suspicion of money laundering facilitation. The Tornado Cash ban was groundbreaking because it was the first time a government agency sanctioned open-source code rather than a single corporation. It also expressed worries about Ethereum’s capacity to withstand censorship.

To its credit, the crypto community has launched a number of activities in response to the ruling, the most significant of which being Coin Center’s lawsuit against OFAC. The outcome of the lawsuit might have a significant influence on the future of cryptocurrency since it will establish if the US government has the authority to prosecute other decentralized ventures.

FTX  liquidated.

By the fall of 2022, the sensation of calamity had nearly become commonplace in the crypto world. Terra had crashed, a dozen or so important firms had gone bankrupt during the summer, the Treasury had made an open-source protocol illegal, and so on. But, while we were virtually numb from the magnitude of the year’s disasters, 2022 kept the most stunning tragedy for last.

FTX was on top of the world just a month ago. The Bahamas-based exchange was notorious for spending a lot of money on advertising its image, and as a result, it became as near to a household brand in crypto as there is. FTX clearly targeted the American retail customer by connecting itself with sports, making sponsorship deals with the likes of Tom Brady and Steph Curry, plastering its name on the Miami Heat’s arena, and shelling out on Super Bowl advertising. When other centralized custodians began to collapse, FTX stepped in to provide emergency financing and investments to avert the worst-case scenario.

When FTX’s scruffy CEO, Sam Bankman-Fried, visited D.C. to hold court with politicians and regulators, he would make a special effort to trade in his cargo shorts for a shirt and tie, assuring them of FTX’s trustworthiness and commitment to level-headed cooperation between government and industry to institute reasonable rules and regulations for the space. He featured magazine covers, entertained past heads of state at FTX events, and made great displays of his generous tendencies, saying that his ultimate objective was to generate as much money as possible in order to give it all away to good causes.

So allegations of illiquidity at FTX’s officially-unofficial sister business, Alameda Research (also formed by SBF and, according to court records, totally under his control), may put a strain on FTX came as a surprise in early November. This triggered a bank run on the site, revealing that the majority of the exchange’s assets were already gone. According to most reports, FTX “lent” the deposits to Alameda, which had lost billions on poorly managed, high-risk bets. Then Alameda lost those as well, leaving FTX with a $10 billion hole in its books.

As additional information emerge from witness testimonies and court filings, it’s become brutally evident that FTX was not merely a terrible corporation, but an exceedingly awful one. Everything about the FTX debacle was spectacular, with each discovery of misconduct, dishonesty, duplicity, ineptitude, and fraud being outmatched only by the next. Obviously, the circumstances are still hazy, and no one has been found guilty of any crimes. But we know at least two things for certain: there is considerable evidence that FTX withdrew $10 billion from client accounts to pay Alameda’s disastrous transactions, and they didn’t bother keeping track of the money.

It’s one thing to cook the books; it’s quite another to not keep any books at all. Even providing the most liberal benefit of the doubt shows, at best, total ineptitude. It now appears likely that when FTX suspended withdrawals during the November 8 bank run, it was partly because the business didn’t even know where the money was.

Three days later, FTX declared bankruptcy, and SBF “resigned” as CEO of FTX. He was promptly replaced by John J. Ray III, a guy who has made a career of managing the dissolution of failing enterprises, some of which failed due to fraud or other wrongdoing. SBF’s defense, if one can call it that, has been an unwise sequence of public statements, interviews, and tweets that have done nothing but infuriate everyone watching and add to the prosecutors’ collection of evidence.

He’s still in the Bahamas, purportedly “under supervision,” but living in his multimillion-dollar Nassau apartment; most observers, however, are puzzled as to why he’s not now “under supervision” at a federal detention facility without bail. Bernie Madoff was caught within 24 hours of authorities knowing of his improprieties, leaving us to question what’s taking them so long this time.