The year 2022 was a defining period for the cryptocurrency industry. Amid extreme volatility, widespread greed, and unprecedented corporate failures, the market experienced dramatic upheavals that reshaped its landscape. Still, the year wasn’t without its bright spots: major technical upgrades, substantial charitable fundraising, and significant cultural moments also took place.
Here’s a closer look at the ten most impactful events that influenced the crypto space in 2022.
The Fall of FTX
The unraveling of FTX began with a CoinDesk report revealing concerning details about Alameda Research’s balance sheet. What followed was a public dispute between FTX’s then-CEO Sam Bankman-Fried and Binance CEO Changpeng Zhao, who began selling off large amounts of FTX’s native token, FTT.
Despite public reassurances from FTX leadership, users grew nervous and initiated a mass withdrawal of funds—approximately $6 billion over one weekend. When the exchange halted withdrawals, it became clear that the situation was critical. On November 8, FTX announced it was seeking acquisition by Binance, but the deal fell through. Days later, the company filed for bankruptcy.
The aftermath exposed severe mismanagement, comingling of funds, and alleged misuse of customer assets. Bankman-Fried was later arrested and extradited to the US to face multiple charges.
The LUNA Collapse
One of the most catastrophic failures of the year was the collapse of Terra’s LUNA and its algorithmic stablecoin UST. The system was designed to maintain its peg through a dual-token mechanism, but it proved vulnerable under selling pressure.
When UST lost its dollar peg, it triggered a death spiral: more LUNA was minted to restore the peg, which devalued LUNA, leading to even more minting. At the peak of the crisis, LUNA’s supply ballooned from 340 million to over 6.5 trillion tokens. The entire ecosystem, once valued at over $40 billion, was wiped out virtually overnight.
This event had a domino effect, contributing to the failure of several crypto lending firms and hedge funds.
Three Arrows Capital (3AC) Implodes
Once considered one of crypto’s most successful hedge funds, Three Arrows Capital (3AC) faced massive losses following the LUNA crash. The fund had significant exposure to LUNA and other sinking assets, including stETH and the Grayscale Bitcoin Trust.
When lenders began issuing margin calls, 3AC couldn’t meet its obligations. The fund’s collapse sent shockwaves throughout the industry, as many major lending platforms and brokers had extended large loans to 3AC. Eventually, the fund filed for bankruptcy, with creditors claiming losses upward of $3.5 billion.
Crypto Donations for Ukraine
In a display of crypto’s practical utility, Ukraine received nearly $100 million in cryptocurrency donations following the Russian invasion. The government publicly shared wallet addresses for Bitcoin, Ethereum, and USDT, enabling direct, borderless contributions from across the world.
An announced airdrop campaign further accelerated donations, though the government later canceled the airdrop in favor of an NFT sale. While the NFT effort raised only around $1.2 million, the overall crypto donation initiative demonstrated how digital assets could be used for global humanitarian aid.
Yuga Labs’ Dominance
Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC), had a landmark year. In March, it airdropped ApeCoin tokens to all BAYC and MAYC holders—each NFT received tokens initially worth around $140,000.
The company also launched Otherside, a metaverse project, selling 55,000 virtual land parcels for about $317 million in May—one of the largest NFT sales in history. Yuga’s successful expansion reflected the growing influence of NFTs and digital collectibles within the broader crypto economy.
The Ronin Bridge Hack
Axie Infinity, one of the most popular blockchain games, suffered a devastating security breach when hackers exploited the Ronin network bridge, stealing around $540 million in crypto assets. The attack was made possible after hackers gained control of five of the network’s nine validators.
It was later revealed that a senior engineer at Sky Mavis, Axie’s parent company, had been phished through a fake job offer. The Lazarus Group, a North Korean hacking collective, was identified as the perpetrator. In response, Ronin increased its validator count and reinforced security protocols.
Celsius Network Freezes and Fails
Celsius Network, a major crypto lending platform, suspended withdrawals in June 2022 amid extreme market conditions. The company had significant exposure to the LUNA collapse and had engaged in high-risk strategies, including deploying customer funds in experimental DeFi protocols.
By July, Celsius filed for Chapter 11 bankruptcy protection. Court filings revealed a $1.2 billion hole in its balance sheet. The case highlighted the risks of centralized lending platforms operating with inadequate risk management and transparency.
Genesis, Grayscale, and DCG Under Pressure
Digital Currency Group (DCG), a giant in the crypto investment space, faced mounting challenges throughout the year. Its subsidiary Genesis Global Capital incurred heavy losses from loans made to Three Arrows Capital and exposure to FTX.
Another DCG subsidiary, Grayscale, saw its Grayscale Bitcoin Trust (GBTC) trade at a steep discount to net asset value, sometimes exceeding 50%. This created liquidity issues for investors and placed additional strain on DCG’s financial health. Concerns around DCG’s solvency and structure grew as the bear market deepened.
The Ethereum Merge
Amid the turmoil, Ethereum successfully executed one of the most ambitious upgrades in blockchain history: The Merge. This transition from proof-of-work (PoW) to proof-of-stake (PoS) was completed smoothly in September 2022.
The upgrade reduced Ethereum’s energy consumption by over 99% and altered its tokenomics. Post-Merge, the network issuance rate fell significantly, and with EIP-1559 fee burns, Ethereum became a deflationary asset during periods of high demand.
FAQs: Common Questions About Crypto in 2022
What Caused the LUNA Crash?
LUNA collapsed due to a flawed algorithmic stablecoin design. When UST lost its peg, the system entered a negative feedback loop where more LUNA was minted, decreasing its value and accelerating the crash.
How Did Crypto Help Ukraine?
Crypto allowed quick, cross-border donations directly to the Ukrainian government. Nearly $100 million was raised in Bitcoin, Ethereum, and USDT, demonstrating the practical use of digital assets in crisis situations.
What Was the Impact of The Ethereum Merge?
The Merge drastically reduced energy consumption and changed ETH issuance. It made the network more environmentally sustainable and introduced a deflationary mechanism that could reduce ETH supply over time.
Why Did So Many Crypto Companies Fail in 2022?
Many firms were overleveraged, had poor risk management, and held toxic assets like LUNA or FTT. A cycle of margin calls, bank runs, and loss of confidence led to multiple bankruptcies.
Is Crypto Donation Safe?
While crypto donations are fast and global, donors should verify recipient addresses through official channels. Scammers often create fake addresses during major events.
What Can We Learn From the FTX Collapse?
The failure of FTX underscored the importance of self-custody, transparency, and regulatory oversight. Users are now more aware of the risks of storing funds on centralized exchanges.
2022 was a year of hard lessons and technological progress. While scandals and failures captured headlines, the underlying technology continued to evolve. The industry now focuses on rebuilding trust, improving security, and developing more sustainable and transparent models.
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