Even by cryptocurrency standards, it’s been a wild year. It started with a British teenager who got rich by creating and selling NFTs from his bedroom and ended with Sam Bankman-Fried, an important figure in the industry, pleading with the judge for bail because he is too vegan to go to jail. We walk you through what’s going on, every month. The mind boggles what can happen next year.
Non-stop promotions and celebrity endorsements in 2021 mainstream non-fungible tokens (NFTs).. These unique digital items are used to prove ownership, and while they can be used for anything, they are most commonly associated with digital art. Benjamin Ahmed, a 12-year-old from Pinner in north-west London whose father taught him to code when he was five, made (on paper) £750,000 selling pixelated whales as digital artwork.
The British Museum announced that it will auction NFTs of famous works by JMW Turner as part of an ongoing project. Meanwhile, the world’s first NFT museum opened in Seattle.
HMRC seized NFTs for the first time as part of an investigation into suspected VAT fraud, becoming the first arm of UK law enforcement to confiscate one of the digital tokens. Three people were jailed as part of a £1.4m fraud case, and the taxman said the act was “a warning to anyone who thinks they can use crypto assets to hide money from HMRC”.
Sing Bright-colored ATMs you often see who claims to dispense bitcoin? Turns out it might not be above board. That’s according to the Financial Conduct Authority, which ordered all 81 machines to be shut down, saying that none of them were operated by a company with a UK license to offer cryptocurrency services.
Meanwhile, NFTs continue to dominate the news with Ukraine announcing it will issue NFTs to finance the war effort. It is the country’s latest step towards a highly modern method of war funding, following a previous successful appeal for cryptocurrency donations, which raised £38m for the besieged country.
At the end of the month, the Meta History Project: NFT War Museum of Ukraine was launched with the support of the Ministry of Digital Information. It has now raised $973,500 (£802,787).
Bill Clinton, Tony Blair and Katy Perry came to the Bahamas. No, this is not the start of a joke, but an exclusive crypto conference. Co-hosted by FTX, the crypto business brainchild of wunderkid Sam Bankman-Fried, Crypto Bahamas brings together high-profile guests alongside the sandal-wearing vanguard of technology’s new frontier. Blair commented that she felt “a bit overdressed” when on stage with Bankman-Fried, who wore a T-shirt and shorts to host the former world leader.
Back in the UK, enthusiasm for NFTs has not waned, as has the chancellor Rishi Sunak asked Royal Mint to create NFT. “This decision demonstrates the forward-looking approach we are determined to take to crypto assets in the UK,” the Treasury said at the time. The project is still going ahead, despite the apparent delay.
The crypto world was shaken when two linked cryptocurrencies – Luna and Terra – plummeted in value. Ultimately, the breakdown led to a market crash that wiped out nearly $45bn in value in a week.
The founder of both tokens, Do Kwon, is facing lawsuits from South Korean authorities and disgruntled investors. He also had to deal with the fact that, just a month earlier, he had named his newborn daughter after the now-failed digital coin. “Baby Luna,” he said at the time. “My dearest creation is named after my greatest invention.” Despite the accident, the baby’s name remains the same.
Another person living with the memory of Luna’s crash is Mike Novogratz, founder of asset management firm Galaxy Digital. After publicly showing off Luna’s wolf-themed tattoo earlier in the year, it took over the top of his arm.
Investors came to scoff in the wake of the cryptocurrency’s collapse, but it seems to take it in stride. “My tattoo will be a constant reminder that venture investing requires humility,” he told his followers.
The collapse of Terra had a huge contagion effect throughout the crypto ecosystem, wiping billions of dollars off the value of cryptocurrencies and pushing several companies into bankruptcy. Bitcoin dropped below the $20,000 mark for the first time since 2020.
Investors are finding different ways to deal with fund decimation. One group was set up on the Telegram messaging app specifically to scream about the state of the market. Users can only send voice notes of themselves screaming.
Amidst the chaos, one major player began buying distressed companies. It’s FTX, the company that hosts the magnificent Bahamas gatherings. Founder Sam Bankman-Fried said he felt responsible for rescuing the industry.
The British Army’s Twitter and YouTube accounts fell victim to hackers, who used their profiles to direct followers to crypto scam websites.
On Twitter, the account name and picture were changed to look like the official page of the NFT collection “The Possessed”, leaving the Army with a drooling, decapitated cartoon character as its profile picture.
After the account was returned to its owner, the Ministry of Defense said the Army “takes information security very seriously” and was investigating the incident. An MoD spokesperson told i if the probe is still running now.
Another famous face joins the crypto world in form Martin Shkreli, a “bro pharma” executive who became infamous for raising the price of antiparasitic drugs, and later went to prison for securities fraud (no relation). Released in May, he launched new crypto projects over the summer, including his own cryptocurrency, Martin Shkreli Inu.
Shkreli is not the only controversial figure who has been in crypto this year. Socialist con artist Anna Sorokin, aka Anna Delveysubject from Netflix Create Anna, launched a collection of NFTs in June. WeWork’s eccentric founder, Adam Neumann, is also getting in on the action with his “carbon credit crypto project”.
The crypto world reacted as tactfully as you’d expect to the Queen’s death. One project launched an NFT that describes itself as a framework. Several others released commemorative tokens. But for at least one crypto project, the king’s death caused a delay. “Bowie on the Blockchain”, the David Bowie-themed NFTs auction, has been postponed out of respect for “the British people and Queen Elizabeth II”.
Bowie fans who didn’t like the idea suggested it be scrapped altogether. But moving forward the next month, it raised $127,000.
Kim Kardashian fined by US regulators for “unlawfully touting” the EMAX crypto asset, a token created by an anonymous group of developers. The reality star, who did not tell his followers that he was paid $250,000 for the promotion, was ordered to pay $1.26 million.
Meanwhile, no longer associated with the role of Cabinet minister, Matt Hancock has had time to spend on one of his real passions: crypto. The former secretary of health gave a speech, wrote op-eds, and in October reassured fellow crypto enthusiasts in an event that the failure of large companies on the board is a “sign of vibrancy in the market”.
All this time, crypto exchange FTX has built a reputation as the legitimate face of cryptocurrency. Founder Sam Bankman-Fried, known in the community as SBF, has been advocating for crypto regulation and trying to save struggling companies in the sector.
This all changed in early November when a series of questions about the company’s balance sheet led to The rapid collapse of FTX. It filed for bankruptcy on November 11.
John J Ray III, an experienced restructuring expert who has worked on major corporate failures including the Enron scandal, was brought in to replace SBF. As more details emerge about what happened at FTXthe company’s new chief executive gave an alarming verdict on the debacle: “Never in my career have I seen a complete failure of corporate control and no reliable financial information as has happened here.”
Being compared to Enron might make most people feel like hiding under a rock for the future, but not Bankman-Fried.
The 30-year-old started a round of media appearances which he ignored. He said he did not know what happened to the missing money from his FTX account; they don’t know what happened to the company’s shares on Twitter; he – the so-called tech genius – doesn’t know how to code. If there’s one thing space watchers expect, it’s more of a surprise.
Meanwhile, at the time of writing, with bitcoin in the doldrums, Bankman-Fried will be released on $250m bail as he awaits trial on fraud charges related to the exchange’s collapse. 2023 will be a big year for them – as well as all crypto investors.