2023 was a wild ride for the world of cryptocurrency, with twists and turns that kept even the most seasoned traders on their toes. From soaring highs to gut-wrenching lows, it was a year that saw some of the most significant events in crypto history. So, buckle up and get ready to relive the top five defining moments that shook the crypto world in 2023. From FTX collapse to Binance Smart Chain Hack.
This is at the top of the list because a lot of people in the crypto industry didn’t see it coming. The former CEO, Sam Bankman-Fried was seen as the poster boy of the cryptocurrency industry.
The issues started on November 2, when an article published by Coindesk raised concerns about FTX and Alameda Research.
The article claimed that Alameda Research’s primary asset was FTT, the native token of the FTX network. The article also suggested that FTX was using FTT as collateral on its balance sheet, leading to worries about the potential risks associated with FTT’s volatility and the impact on the capital of FTX and Alameda.
Following the Coindesk report, Binance, a competitor exchange, revealed its plans to sell approximately $530 million worth of FTT. Binance’s CEO, billionaire Changpeng Zhao, took to Twitter to announce that Binance would be liquidating any remaining FTT tokens in light of the recent revelations.
This situation that started out as a Twitter war between two crypto exchange founders led to a bank run on FTX. The now-bankrupt exchange (FTX) had to suspend withdrawals due to the $6 billion worth of withdrawal requests within 72 hours. In an attempt to reassure investors, SBF, the CEO of FTX, tweeted that everything was fine, in a now-deleted tweet.
Binance disclosed that they had entered a non-binding agreement to acquire FTX to assist in alleviating the liquidity crunch. However, the deal collapsed after conducting due diligence. The very next day, Binance revealed that they could not proceed with the acquisition of FTX due to reports of mismanaging customer funds and a purported investigation by a US agency.
After an abrupt collapse, the company was left with no choice but to file for bankruptcy protection, which had a ripple effect throughout the cryptocurrency industry, and we are currently observing the ongoing aftermath.
The Luna cryptocurrency experienced a crash that was attributed to its association with TerraUSD (UST), the algorithmic stablecoin of the Terra network. On May 7, more than $2 billion worth of UST was unstaked from the Anchor Protocol, and a significant portion of it was rapidly liquidated.
The cause of this sell-off is a matter of dispute, with some suggesting that it was in response to increasing interest rates, while others suspect a malicious attack on the Terra blockchain. The resultant sell-offs led to UST’s value dropping from $1 to $0.91, causing traders to swap 90 cents worth of UST for $1 worth of Luna.
As UST was offloaded in large amounts, it began to depeg, causing panic selling and ultimately leading to the minting of more Luna and an increase in its circulating supply. As a consequence of this crash, crypto exchanges began delisting Luna and UST pairings, and Luna was eventually abandoned due to its worthlessness.
The collapse of Luna had far-reaching effects on the cryptocurrency market, which was already facing significant instability and challenges at the time. The meltdown of Luna is believed to have contributed to the decline in the value of Bitcoin and resulted in an estimated loss of $300 billion in the overall cryptocurrency sector.
According to Cointelegraph’s data, tracked crypto donations to the Ukrainian government, military, and charities have exceeded $37 million. These donations include Bitcoin (BTC), Ether (ETH), Tether (USDT), and other altcoins, but do not account for donations made between individuals.
The largest recipient of crypto donations is the Reserve Fund of Ukraine, backed by the country’s native cryptocurrency exchange Kuna, which has raised about $13 million in crypto. Come Back Alive, a non-governmental organization supporting the Ukrainian Armed Forces, has received over $7.2 million in BTC donations.
In another crypto scandal, hackers exploited a vulnerability on the Binance network, resulting in the creation of 2 million BNB, valued at approximately $570 million. This hack is just one of many thefts and frauds in the turbulent world of cryptocurrency.
Binance co-founder and CEO Changpeng Zhao (also known as CZ) confirmed that the attack occurred on a cross-chain bridge, a mechanism that enables users to transfer digital assets between different blockchains. The hackers were able to exploit a vulnerability in Binance Bridge, which allowed them to generate 2 million BNB tokens out of thin air.
By exploiting a bug in the smart contract, the attacker transferred one million BNB tokens twice into their wallets.
On June 29, 2022, the announcement of the liquidation of 3AC, a significant crypto investment fund, was met with mixed reactions. While some viewed it as a sign of the market’s impending doom, others were pleased, given the controversial reputation of 3AC and its executives Zhu Su and Kyle Davies.
Nonetheless, the collapse of 3AC, also known as Three Arrows Capital, highlights the dangerously interconnected nature of the crypto industry. The downfall of Terra sparked a chain reaction that put projects with exposure to Terra’s $LUNA and $UST at risk, culminating in the bankruptcy of leading crypto lender Celsius. 3AC was the next domino to fall, with the possibility of others following suit.
Although 3AC is less familiar to the general public than Terra or Celsius, it is a significant player in the blockchain sector, commanding over $10 billion in assets at its peak. Its CEO, Zhu Su, was also a respected figure on crypto Twitter. Therefore, it is essential to comprehend the function of 3AC, why it went into liquidation, and the implications it may have for the crypto space.
In conclusion, 2022 was a year of defining moments in the cryptocurrency world. From the emergence of NFTs to the ongoing regulatory scrutiny, these events have highlighted the need for a more stable and mature crypto ecosystem.
The surge in popularity of crypto investments and decentralized finance has also brought new opportunities for investors, while at the same time raising concerns about the sustainability and security of the market.
As we move forward, it’s clear that the crypto industry will continue to face new challenges and opportunities. Whether it’s overcoming regulatory hurdles or embracing new technologies, the future of crypto will undoubtedly be shaped by these defining moments and the lessons learned from them.
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