The crypto industry has again crossed the $1 trillion mark. The space – which was given several heated blows over the past 12 months – has seen its overall valuation fall from about $3 trillion in the beginning of 2022 to less than $1 trillion by the time the year ended. This means more than $2 trillion was lost to time over the course of one year.
Crypto Is Returning to Form
The crypto arena dealt with several problems throughout 2022, which will likely go down as one of the most – if not the most – problematic windows for the industry. Among the big issues crypto dealt with were the many bankruptcies that befell digital currency companies, both large and small. Among the names that likely come to mind right about now are Celsius, Voyager Digital, and Three Arrows Capital.
Celsius arguably set off the bankruptcy bang of 2022. In the summer of that year, the company caused many customers and traders alike to raise their eyebrows in shock and disgust when executives announced they were going to be halting all withdrawals indefinitely due to ongoing speculation and volatility impeding the market.
Things didn’t stop there, however, as Celsius was quick to file bankruptcy so it could explore ways of staying in business without having to deal with angry lenders who wanted their money back right away. It has since come to light that the company might have engaged in fraudulent activities with customer funds.
If this doesn’t ring a bell, it should, for it’s quite similar with the scenario traders saw with FTX, the once golden child of the digital asset space. FTX was a crypto trading platform that first rose to fruition in 2019. Within three years, the company jumped through the ranks and became one of the top five crypto exchanges out there. The enterprise was on top of the world and its founder and primary executive – Sam Bankman-Fried – was lauded as a genius.
But things took a nasty turn when in November of 2022, SBF complained of a liquidity crunch on social media. He also said his company needed fast cash, and that he was approaching Binance – the company’s largest rival – about a possible buyout. Things didn’t move in this direction, and FTX had no other choice but to file bankruptcy, which was followed by SBF’s resignation.
So Much Trouble, but the Space Is Likely Recovering
From there, fraud charges came about for Bankman-Fried after he was alleged to have used customer funds to pay off loans for a separate company and to invest in Bahamian real estate. He is now awaiting trial at his parents’ California home following his arrest in the Bahamas.
The fact that the crypto arena has jumped past $1 trillion again is a good sign this year is starting off right.
