Major crypto events that dominated 2023

What an eventful year it has been for the crypto industry!

With 2023 coming to an end, the cryptocurrency space has had its share of battles and victories, all of which continue to shape an industry that, although still growing, has managed to make a mark in the global financial sector.

This year, regulators have come down hard on key players in the market, one of the biggest and most influential CEOs has pleaded guilty to a criminal charge, and the hype surrounding a mock Bitcoin exchange-traded fund (ETF) has intensified following applications from major financial institutions .

We now move on to explore some of the major events that made headlines in 2023.

Bank Collapses That Affected Crypto Companies

Silicon Valley Bank (SVB), Signature Bank and Silvergate, which catered to crypto businesses and tech startups, collapsed within a week in March in what was described as one of the major collapses to hit the US banking sector shake.

It all started with Silvergate Bank, which revealed it was struggling to stay afloat after reporting a $1 billion loss in the fourth quarter of 2022 following the collapse of one-time cryptocurrency exchange giant FTX. Days after, the financial institution announced the closure of its Silvergate Exchange Network (SEN) – an instant settlement service that allowed crypto customers to make payments 24/7 – stating that the move was a “risk-based decision”. .

Silvergate eventually went into voluntary liquidation, albeit solvent. Amid the bank’s crisis at the time, crypto heavyweights such as Huobi and Coinbase cut ties with Silvergate. A few days later, the California Department of Financial Protection and Innovation SVB, which mostly served the technology industry, closed, becoming the largest bank in the United States to fail after Washington Mutual Bank in 2008.

SVB experienced a bank run after depositors made large withdrawals. Furthermore, banking regulators shut down crypto-friendly Signature Bank, which experienced customer panic after SVB’s fall, leading to large stock sales and massive outflows.

The crashes, meanwhile, had a significant impact on crypto companies, with one of the biggest customers being Circle. The USDC stablecoin issuer revealed that it held a portion of its cash reserves in various US financial institutions, including SVB, Silvergate and Signature banks, with more than $3 billion in SVB.

The USDC temporarily disconnected due to SVB’s failure. Other crypto companies that had exposure to SVB and Signature were Ripple, BlockFi, Coinbase and Paxos.

The Inscriptions Craze

First started on the Bitcoin network, the inscription mania has also found its way to Ethereum and Ethereum Virtual Machine (EVM) chains.

Inscriptions, simply put, are data files embedded on the blockchain. The craze started on the Bitcoin blockchain with Bitcoin Ordinals, which, similar to non-fungible tokens (NFTs), can be subscribed to a satoshi – the smallest denomination of Bitcoin (BTC).

The ordinal craze has caused an increase in transactions on the Bitcoin network. But the trend has also caused network congestion, along with high fees.

Meanwhile, inscriptions went beyond the Bitcoin network when developers found a way to deploy inscriptions on Ethereum and other blockchains starting in November. Inscriptions on Ethereum and EMV compatible chains are embedded in transaction call data.

According to data from Etherscan in December, an increase in transaction activity on EVM chains was mainly attributed to inscriptions.

However, Bitcoin Ordinals in particular have not been without criticism, with maximalists labeling the trend as spam and a scam. Bitcoin Core developer Luke Dashjr said that Ordinals creators are exploiting vulnerability in Bitcoin Core to spoof the blockchain. The developer also believes that ordinals are an attack on Bitcoin.

Binance and Coinbase hit with SEC lawsuit

In June, the US Securities and Exchange Commission (SEC) went after two of the largest cryptocurrency exchanges – Binance and Coinbase. The regulator said in its lawsuits against both companies, each filed within 24 hours, that both companies violated securities laws and offered assets for trading that were considered securities.

However, Binance and Coinbase have denied the SEC’s claims, with both exchanges seeking to dismiss the regulator’s lawsuits. Binance.US, the US subsidiary of the international exchange Binance, has cut its workforce as the company anticipated a long and expensive legal battle with the SEC.

Ripple’s wins against the SEC

A month after the SEC’s lawsuit against Binance and Coinbase, another crypto company, embroiled in a long legal battle with the regulator, scored a major victory in July.

In December 2020, the SEC sued Ripple Labs, the company behind the XRP token, for a $1.3 billion unregistered securities offering through the sale of XRP. Ripple and its CEO, Brad Garlinghouse, fought back against the allegation, insisting the firm committed no crime.

A partial victory came for Ripple in July 2023 after Judge Analisa Torres ruled that XRP sales on public crypto exchanges did not violate securities laws. However, Judge Torres stated that selling XRP directly to sophisticated investors violated securities laws.

Ripple scored another victory in October after Judge Torress dismissed the SEC’s appeal of the judge’s decision in July. A third win for the company came in the same month after the security watchdog dropped its charges against Ripple’s top executives – Brad Garlinghouse and Chris Larsen.

BlackRock’s Spot Bitcoin ETF Filing

BlackRock, the world’s largest asset manager with nearly $10 trillion in assets, made headlines in June after the company filed for a mock Bitcoin exchange-traded fund (ETF) with the SEC. After BlackRock’s filing, other companies such as Fidelity Digital, WisdomTree, Invesco and VanEck resubmitted their applications.

The SEC has yet to approve any spot Bitcoin ETF in the United States, with the regulator favoring only Bitcoin futures ETFs. However, there has been renewed hope for a possible spot BTC ETF, with reports stating that discussions between potential issuers and the SEC have reached an advanced stage.

Meanwhile, ETF applicants, investors and the broader crypto community have set their sights on deadlines between the 5th and 10th of January 2024, hoping that the US will finally have a local Bitcoin ETF product after years of delays and rejections.

Worldcoin: The Crypto Iris Scanning Project

Worldcoin, co-founded by OpenAI CEO Sam Altman, launched its WLD token in July 2023. However, the project has faced criticism for its iris scanning feature, which users will undergo to get WLD tokens.

Regulatory authorities in France, the United Kingdom, Germany and Argentina have raised privacy concerns and launched investigations into the project. Kenya, on the other hand, has suspended Worldcoin activities in the country.

Amidst regulatory scrutiny, recent reports said Worldcoin has quietly stopped its orb verification for offline users in India, Brazil and France. Meanwhile, the project expanded to Singapore, allowing users to verify their unique humanity with an Orb.

Grayscale’s win against the SEC

After its defeat against Ripple, the SEC suffered another loss in a legal case involving the asset management firm Grayscale. The latter sued the Commission for rejecting his request to convert his Grayscale Bitcoin Trust (GBTC) into a mock Bitcoin ETF.

In August, a US court ordered the regulator to reconsider Grayscale’s application, which served as a major victory for the crypto company. However, some experts noted at the time that the victory did not mean an automatic endorsement of spot Bitcoin ETF.

Sam Bankman-Fried: From Crypto Darling to Criminal

November can be said to be one of the most eventful months in 2023 for the cryptocurrency industry. Sam Bankman-Fried, commonly known as SBF, whose company FTX collapsed in November 2022, was found guilty of a seven-count indictment, including fraud and conspiracy, nearly a year later.

After FTX’s collapse, Bankman-Fried resigned from his position as CEO of the crypto exchange. The former chief was subsequently arrested and later extradited to the United States.

After a month-long trial, which began in October 2023, a 12-man jury found SBF guilty on all seven counts involving fraud, conspiracy and money laundering, with the charges carrying a combined maximum sentence of 120 years in prison. After the conviction, Bankman-Fried’s attorney said his client maintains his innocence and will continue to fight the allegations.

SBF’s sentencing is scheduled for March 28, 2024, with a second hearing also scheduled for the same month. However, a recent letter, according to Bloomberg, revealed that Bankman-Fried will not face a second trial, with US prosecutors notifying Judge Lewis Kaplan of their intention to file the second set of charges abandoned, part of which accuses the former entrepreneur of bank fraud. attempting to bribe foreign officials, and operating an unlicensed money transfer business.

CZ steps down and Binance fines $4 billion

Another major event occurred in November, with the largest cryptocurrency exchange by market capitalization, Binance, paying a $4.3 billion fine in a settlement with US regulators.

The company, which faces regulatory issues from various watchdogs including the SEC, paid the hefty settlement in addition to pleading guilty to multiple charges, including willful violation of the Bank Secrecy Act.

Binance CEO Changpeng Zhao, popularly known as CZ, also pleaded guilty to violating the Bank Secrecy Act, agreed to step down from his position and pay a personal fine of $50 million.

Meanwhile, CZ, who also resigned as chairman of the board of directors at Binance.US, will remain in the US until his sentencing on February 23, 2024, with a US district court ruling in favor of the government, which claimed he was ‘ a flight risk.

Binance’s former head of regional markets outside the US, Richard Teng, has become the company’s new CEO.

Big hacks in 2023

While burglary incidents recorded less volume in 2023 compared to 2022, there were still some notable burglaries that occurred this year.

DeFi lending protocol Euler Finance lost $197 million in customer assets in a flash lending attack in March. In April, the project announced that the attacker had returned all recoverable funds.

Crypto exchange Poloniex also fell victim to a hacking incident, causing the platform to lose $125 million in various assets, including Ether (ETH), USDT, USDC and Shiba Inu (SHIB).

Another project, Mixin Network, suffered a $200 million loss in September after attackers exploited a vulnerability in the database of its cloud service provider. Shortly after the attack, the Mixin team appealed to the hacker to return the stolen funds while offering a $20 million bug reward.

Fingers crossed for 2024

With 2024 just around the corner, the industry seems optimistic about a potential crypto bull run. There have already been massive Bitcoin (BTC) price predictions for 2024, which analysts and stakeholders believe will be driven by a possible spot Bitcoin ETF approval and the upcoming Bitcoin halving event.

Bitwise recently predicted that BTC’s price will reach a new high of $80,000 in 2024. Other predictions put the value of the crypto-asset at $100,000 and above per coin in 2024 as well.

It remains to be seen how the new year will shape the crypto industry, with various activities and expectations, but hopefully the leap year will be good for the market.