The year 2022 will go down in history as one of the most horrific and shocking years for the cryptocurrency industry, as it witnessed a number of major explosions, a large number of bankruptcies and fallouts, as well as everything in between.
Forbes estimates that several industry participants have lost their billionaire status, while others’ fortunes were wiped out to zero, in addition to the obvious price declines of cryptocurrency assets.
Crypto Debacles from Terra to FTX
As a result of massive global inflation, increasing interest rates, and warnings of recessions, the industry has not had the best of times. A war in the middle of Europe, which began in February, is yet to come to a conclusion.
However, not everything can be attributed to the weather. Many industry problems have been exposed now, and we can easily find them if we look closely. Snappy investors saw an opportunity to profit by arbitrating UST against LUNA after the Terra ecosystem collapsed when its algorithmic stablecoin lost parity with the dollar. An instantaneous $40 billion crash resulted.
As bad as it is on its own, the debacle of two former top 10 cryptocurrencies has demonstrated how intertwined the industry is. As a result, many hedge funds and investors began to struggle, leading to bankruptcy filings by Three Arrows Capital, Voyager, and other companies.
As investors began to get used to the idea of a prolonged crypto winter, the situation began to normalize in October. Things were about to turn for the worse when it was revealed that FTX had massive solvency issues and had to file for bankruptcy as well.
It was a major blow for the entire industry since FTX, Alameda, and SBF himself were among the most prominent parties in the industry. It all turned out to be a gigantic lie in which the founder of both misappropriated user funds and somehow misplaced $8 billion.
Cryptocurrencies were in shambles again, with prices plummeting to multi-year lows. In just a year, Bitcoin dropped from $69,000 to under $16,000.
One year, $116B gone
In addition to the $2.2 trillion that is gone from the cumulative market cap of all crypto assets, Forbes calculated that every industry member, company founder, or investor has also seen their personal wealth decline.
Given the fact that SBF claimed he had only $100,000 left in his bank account after FTX filed for bankruptcy, some of the names are quite expected. In fact, less than a year ago, Bankman-Fried’s fortune was estimated to be over $20 billion.
According to Forbes, Gary Wang, the co-founder of Alameda and FTX, has also lost all of his money. Barry Silbert, whose company Digital Currency Group includes Genesis, Grayscale, and CoinDesk, is an example of this.
The DCG trust has a lot of problems, primarily due to bad debt from Genesis, while Grayscale’s trusts have all lost a lot of investors.
Among the CEOs of Binance, Changpeng Zhao, who had $65 billion in personal wealth in March, now has $4.5 billion
