The year 2022 was unlike any other year that I had ever experienced while in crypto. During that time there have been some amazing years, and there were also some bad years as well. But nothing compared to what we saw this year. Perhaps the year felt so shocking due to the high expectations that we had entering the year.
Towards the end of 2021, Bitcoin had just set a new all-time high price of $69k, and the whole market was dreaming about how high prices will go. Little did we know that the market top had already been set. If that would have been the end of it and Bitcoin would have behaved how it had in previous cycles, most of us would have easily accepted that outcome. However, prices fell further than any of us ever expected. Breaking one of the most sacred trends in Bitcoin. For the first time ever we saw Bitcoin drop past its all-time high from the previous cycle. That is partly why the fall of Bitcoin’s price below $20k was so shocking and it didn’t stop there. Falling all the way down to $15k. We learned a very important lesson this year. Nothing is sacred in crypto, and that anything can happen. In fact, we always need to be prepared for the unexpected to happen.
But there is more to the story than just that. If the Bitcoin price would have naturally dropped to where it is today. It would have still hurt, but we would have eventually accepted it. However, the reason why prices dropped so significantly this year was due to our own doing. They were all caused by self-inflicted mistakes in the industry. All of these mistakes cut short the bull run and prevented prices from going to where they may have been destined to go. It became a cycle of pain and wondering “what if?”
It was a time when villains appeared in the crypto market that either single-handedly caused chaos in the crypto market, or had a share of the responsibility, or prevented it from performing to its full potential. It became a year when we learned that no one in crypto can be, or should be trusted. The following were the biggest villains of crypto during 2022.
6. Carried Away / Degen Traders
You will begin to see a trend throughout this article, and that trend is degen trading. While retail users have always been trading with leverage in the crypto market and cannot be prevented. This was the first time that we saw several crypto businesses using such reckless behavior. Companies such as BlockFi that was depending on the GBTC arbitrage play. And when that trade turned negative didn’t have a business plan to be profitable. Companies like Voyager, who wasn’t not acting responsibly and gave out hundreds of millions of dollars in loans uncollateralized. The list goes on. 2022 became a year of not being able to trust any company or fund in crypto. While many avid crypto fans would argue that’s the whole point of crypto. To not trust, but verify. However, this looks very poorly to mainstream people and prevents adoption. Giving the entire market a bad image.
5. Gary Gensler
Gary Gensler was the villain that could have helped crypto soar to unbelievable heights, and also could have protected us from much of the danger that took place this year. Instead, he did neither.
For whatever reason, Gensler seems to be heavily avoiding accepting a spot Bitcoin ETF in the USA. While there are other Bitcoin spot ETFs around the world, the US ETF is the one that really matters. The US financial market is the largest in the world by far, and many other markets will adopt whatever the US decides to do. It’s predicted that once the spot ETF is eventually approved, Bitcoin will soar up to $100k quickly. Yet, Gensler is strongly against it.
He also has avoided giving any substantial regulation on crypto as well. It has recently been learned that he had met with SBF several times. That they were supposedly teaming up to regulate that would benefit FTX. While he could have been regulating crypto, looking into FTX, and potentially stopping the horrible situation before it happened. Instead, he was meeting and teaming up with him.
4. Zhu Su & Kyle Davies
Zhu Su and Kyle Davies ran one of the largest and most respected funds in crypto; 3AC. They had gained notoriety during the covid crash of 2020 and many claimed that they were partly responsible for the recovery that the crypto market would see that year. Yet, they too would go down the degen trading path and dig a hole that was too deep for them to escape from. Since they had such a pristine image in the industry. Everyone was glad to work with them and lend them money. Even if that meant lending to them uncollateralized. After Luna/UST went to zero, 3AC became insolvent.
But that wasn’t the worst of it. Since they were such a key player in the industry, they were connected to several other companies in the market. This caused a contagion effect that led to several insolvencies.
3. Do Kwon
Do Kwon, the founder of Terra Luna/UST makes the list at #3. When you think of the qualities that make up a villain, Do Kwon fits nearly all of them. In early 2022 as Luna was soaring up the charts, he was the talk of the market. When he decided to buy billions of dollars worth of Bitcoin to back UST he became an even bigger force in the market. Since this caused the price of Bitcoin to rise as well, even many Bitcoin maxis began to like Do Kwon.
But it was all an illusion. Lending rates for UST were 20% and there was no way this was viable for the long term. Eventually, the illusion was shattered and the de-peg of UST began, which caused Terra Luna to hyper-inflate to try to bring back the dollar peg. To make matters worse, only a few weeks after this happened, Kwon forked Luna into a new chain to try to start over. While Do Kwon is only at #3 on this list, we can look back to the de-pegging of Luna/UST as the moment when everything went south for crypto this year.
2. Alex Mashinsky
Alex Mashinsky, the CEO of Celsius makes the list of crypto villains at #2. By now you probably already know that Celsius was basically running a Ponzi scheme that used new customer deposits to pay users who were wanting to withdraw. All of those promos they ran that required locking up crypto to get from BTC, were always times when they needed fresh customer deposits. They were always insolvent and weren’t profitable. If that was the end of it, it would have been bad enough.
But Mashinsky was constantly lying and bad-mouthing anyone who had doubts about Celsius. Even just two days before Celsius froze withdrawals, he was making the rounds doing several YouTube interviews declaring that everything was fine at Celsius. That they were in great financial standing. He also played up the image that banks were bad and not to be trusted. That Celsius was an escape from that and were a much better option. That he was for the people. However, it was all a sham, and they declared bankruptcy while freezing billions of users' funds on their service.
1. Sam Bankman-Fried
Coming in at #1 on the list of crypto villains in 2022 is Sam Bankman-Fried. Several years from now the other members on this list may eventually be forgotten, but SBF will always be remembered in crypto history. He is our crypto super-villain. Not only will he be remembered in the crypto markets, but all financial markets similar to how Bernie Madoff is remembered today. Stealing funds from his users, selling fake Bitcoin, donating to politicians to gain their favor and protection, but most of all running one of the biggest frauds we have ever seen.
While most of us were hoping that prices in the crypto market would recover before the end of the year, and that would have likely happened if the FTX situation didn’t come to the forefront. But, we are actually fortunate that we discovered SBF’s fraud now. If this would have happened when they had become even larger and had complete control of the crypto market. It might have been an event that would have set the crypto market back by ten years. Instead, it set the market back maybe 2 years.
At the end of the day, the main thing that you should take away from this article is that there are no gods or heroes in crypto. You should never fully trust anyone. Instead, we must verify, take self-custody of our own crypto, and maybe even reward the companies that do things the right way. Even if they do charge a little more than their competitors. The crypto market is still the Wild West, and villains are around every corner hatching schemes to take your money. We need to always be careful. Today is a better day in crypto than yesterday. And I have no doubts that 2023 will be better than this year.
How about you? Who do you think were the biggest villains in crypto this year?
As always, thank you for reading!
