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Cryptocurrency in Q3 of 2022 wasn’t a happy time, with the market still in the doldrums, crypto contagion still casting a pall over the entire space and the global financial situation spelling trouble for the foreseeable future. It wasn’t all bad for crypto this quarter however, with Ethereum successfully switching to proof-of-stake and Mt. Gox payouts getting closer, but these successes couldn’t erase the general feeling of doom and gloom setting over the space.
Let’s remember what happened in Q3 of 2022.
Bitcoin began the third quarter of 2022 at $19,000 after some consolidation following the immediate impact of crypto contagion, with many believing it was destined for lower.
The quarter started badly for NFT giant Opensea, which admitted that it had suffered a huge data breach when a staff member at Customer.io, an email vendor used by the world’s biggest NFT exchange, illegally downloaded and shared user and newsletter subscriber email addresses with an unauthorised third party. The breach was very similar to the Ledger breaches of 2020, which saw Shopify hacked and the details of almost 300,000 Ledger customers sold and then listed for free online.
Meta brought its ill-fated cryptocurrency adventure to an end this month when it revealed that its Novi wallet, the last bastion of its Libra conquest, was to be shut down, turned off and thrown on the scrap heap after its Whatsapp trial.
With Libra head David Marcus having scampered from the sinking ship some months previously, and with Libra the cryptocurrency (or Diem, as it was oddly renamed) having been sold off, Novi was the last hope for Meta’s crypto goals. That hope, the company decided, was futile, and sacked it off, marking an ignominious end for the platform’s grand ambitions.
The crypto contagion that has scarred Q2 continued in Q3, with Singapore-based crypto lending platform Vauld running out of money and halting customer withdrawals, Circle CEO Jeremy Allaire having to deny that the USDC stablecoin was at risk of collapse, and both Celsius and Voyager Digital filing for bankruptcy. Roger Ver’s debt to Coinflex, which had halted customer withdrawals since June, was also upgraded to a whopping $84 million, with Coinflex forced into legal action to recover it.
July also saw some positive news, with Mt. Gox repayments take another step towards reality, more eight years after the exchange closed, while there was also good news for XRP holders as Jed McCaleb (the Mt. Gox founder, incidentally) finished dumping his billions and billions of tokens on them, also after eight years.
There was huge news for Ethereum supporters this month as the protocol’s proof-of-stake transition was confirmed (provisionally) for mid-September. Not so good was life for Coinbase shareholders, as, combined with the share price taking, the exchange was forced to deny it was insolvent, was alleged to be the subject of an SEC investigation, and had to deal with a former product manager being arrested for insider trading.
August began with yet more indications that a crypto winter was setting in – Coinflex cut its workforce by over 50%, while the second-hand luxury watch market was being overrun thanks to crypto bros looking to get their money back. Singapore-based exchange Hodlnaut also folded thanks to the crypto contagion started by Terra back in June, trapping around $250 million in customer assets.
The month also started badly for Craig Wright, who was found to have lied through his teeth during his libel trial against Peter McCormack. Despite being technically found to have won, in that McCormack was found to have defamed Wright, damages were set to just £1 of the £100,000 that Wright was seeking, as his already bad reputation took another battering.
A huge Solana hack, found to have been down to the popular Slope wallet sending user private keys to a third party in plain text, led to around $4.5 million worth of SOL, USDC and other coins stolen by hackers this month. Slope argued that this error only accounted for 15% of the thefts, with the cause behind the remaining 75% seemingly remaining a mystery.
August also saw another contender for news story of the year when mixing service Tornado Cash was sanctioned by U.S. authorities, alongside 44 Ethereum addresses, due to its connection with North Korean hacking groups. The news sent shockwaves throughout the crypto space and raised the issue of censorship and freedom of speech, leading to legal challenges over its alleged unconstitutionality.
The situation was made worse when a Dutch Tornado Cash developer was arrested shortly afterwards, with the suggestion being that he was aiding in criminal activity by helping create some code.
A company having a better time (at last) was Coinbase, which saw a jump in its share price after it was revealed that investment giant Blackrock intended to use it for institutional crypto trading and custody services. On the other hand, it was also sued twice in August – once for alleged “false and misleading statements” over its stock listing and again by users over access to and protection of their accounts, so swings and roundabouts.
August also saw Iran pay for an import in cryptocurrency in a move that would potentially allow it to skirt U.S. sanctions, before signing into law a bill that allowed it to do just that on an ongoing basis.
This month wasn’t a great one for America’s most wanted money launderer, Alexandr Vinnik, who, having been released early from a French prison for the crime, was snapped up by the U.S. and finally appeared in a U.S. courtroom, more than five years after they arrested him in Greece.
September started with a boost for the NFT space when ticketing giant Ticketmaster announced that it was working with Flow blockchain on a new strategy involving digital giveaways and, potentially, NFT tickets. NFTs remained in the news when football’s governing body FIFA announced its World Cup Web 3.0 venture FIFA+, based on the Algorand blockchain.
Binance caused a stir in September when it announced that it was effectively ditching support for Circle’s USDC stablecoin, as well as TrueUSD (TUSD) and Pax Dollar (USDP). Anyone sending those coins over would see them automatically converted into Binance’s BUSD stablecoin, while all associated trading pairs would be scrapped. Circle boss Jeremy Allaire tried to claim that it wasn’t a big deal and that it would help USDC liquidity, but no one was buying it.
The bear market didn’t seem to have affected Fidelity this month as it was revealed that it was planning to offer Bitcoin trading to its 34.4 million brokerage accounts, while banking giant SWIFT said that it was testing “significant efficiencies” through blockchain-based money transfers, something that Ripple had been trying to do for years.
September wasn’t a great month for Do Kwon, who had an arrest warrant issued for him over his actions in relation to the Terra USD affair, adding to the numerous lawsuits already issued against him.
Without doubt, September belonged to Ethereum, which saw a successful switch from a proof-of-work to a proof-of-stake consensus mechanism after more than four years’ planning. SEC chair Gary Gensler couldn’t help pooping on the party by claiming that each ETH issued could now be a security, but this didn’t stop the celebrations of Ethereum developers and supporters, while mainstream media outlets asked why Bitcoin couldn’t do the same thing.
September also saw a high profile departure from the crypto space when Jesse Powell, one of the old school of Bitcoiners, stepped aside from his role as Kraken CEO to be replaced by the much more corporate COO Dave Ripley. Kraken and Powell had been involved in tangles with the U.S. authorities over allowing sanctioned countries to trade on the platform.
Bitcoin’s price action during Q3 was nothing to write home about, seeing as it was largely stuck in an $18,400 to $24,000 range in a way reminiscent of the 2018 bear market. This stagnation came as NFT prices continued to dwindle, with squiggles and rocks that had been bought for millions of dollars in 2021 now worth just thousands.
A Turbulent Time
Q3 of 2022 was still dominated by the fallout of the Terra affair and the crypto contagion it fueled, with a sense of unease still hanging over the entire space as everyone waited for the next platform to go down. This was not helped by Bitcoin’s price perpetually hitting the bottom of its range, causing sharp intakes of breath every time it did.
With inflation out of control and talk of a global recession, any thoughts of a crypto bull market were firmly on the back burner, with survival quickly established as the aim of the game.
Check back tomorrow for the final part of our four-part review of cryptocurrency in 2022.