Since January 2022 I have been a strategic advisor to Crypto Expo Europe in Bucharest. Back then I wrote about why we are bringing a crypto event to Romania and, a few months later, about what I learned organizing it. That means I follow this industry up close, not from the stands. Which is exactly why I owe my readers, and myself, an honest piece about the year that just ended.
For crypto, 2022 was brutal. Not a correction, not just another “winter”, but a chain of collapses that peaked in November with FTX, one of the largest exchanges in the world. Now, at the end of January 2023, the dust has not fully settled. But you can see fairly well what fell and what is still standing.
A year of falling dominoes
The list is long, and it is worth putting it together, because this was not a single accident. In May, the Terra ecosystem and its stablecoin, UST, collapsed within days, taking the Luna token down with them. A “digital dollar” kept in balance by an algorithm turned out to be, in practice, just a promise. In June, Celsius froze customer withdrawals and in July it filed for bankruptcy. Then came Three Arrows Capital, a fund that had borrowed from everyone, and then Voyager, also bankrupt.
Every failure dragged a few others down with it. These companies had lent money to each other, pledged the same assets and relied on the same trust. When one domino falls, the next one has no choice. In January 2023 Genesis, one of the market’s big lenders, filed for bankruptcy too. Bitcoin ended 2022 below 17,000 dollars, a long way from its peak in the autumn of 2021.
FTX was not a market accident
FTX was different. It was not a reckless fund or an experimental project. It was the “serious” exchange, with its name on stadiums, huge sponsorship deals and a founder invited to conferences and hearings as the responsible voice of the industry. In early November, questions surfaced about the balance sheet of Alameda Research, the trading firm closely tied to FTX. Customers rushed to withdraw, the exchange could not pay them, and on 11 November FTX filed for bankruptcy.
Sam Bankman-Fried was arrested in the Bahamas on 12 December, extradited to the United States and, in early January, pleaded not guilty. The allegations are serious: that FTX customer money was used by Alameda for trading, investments and spending. The court will decide. But whatever the verdict, one thing is already clear: this was not a technology problem. It was a problem of governance, of controls and of people who trusted too much.
What did not die
The irony is that the blockchain itself was fine. Bitcoin kept producing blocks like any other day. Public networks kept working. What collapsed were centralized companies that asked you to hand over your keys and trust them. In other words, exactly the model the technology promised to make unnecessary.
The serious builders are still here too. There are teams that have spent years working on payments, infrastructure, tokenizing real-world assets and digital identity, without promising 20% a year. They were not on stadium billboards. Now they are probably the best positioned. When I wrote in 2021 that crypto was becoming an asset class, I did not expect such a harsh stress test so soon. But this test finally separates the technology from the show.
Regulation is no longer optional
For years, part of the industry saw regulation as the enemy. After 2022, I think the serious people in crypto are waiting for it almost with relief. The European Union reached a political agreement on MiCA (its regulation for crypto-asset markets) in mid-2022, and formal adoption is expected in 2023. It will not fix everything and it will certainly have flaws. But clear rules on capital, on keeping customer money separate and on transparency would have made many of last year’s stories much harder to write.
For an entrepreneur, regulation means cost. For a customer, it means someone is checking. An industry that wants money from ordinary people has to accept that cost.
The lessons I am writing down
None of these are new. They are old rules the market chose to forget while prices were going up:
- Not your keys, not your coins. If your coins sit on an exchange, what you actually hold is a promise from that exchange. For amounts that matter, a wallet of your own is no longer a techie’s whim.
- Proof of reserves, not statements. An exchange holding customer funds should be able to show, verifiably, that it has them. And not just the assets: the liabilities too.
- Charisma is not an audit. A likeable founder with plenty of interviews and powerful friends is no substitute for an independent auditor and a board that asks questions.
- Keep the exchange and proprietary trading apart. When the same group holds customer money and bets on its own account, the conflict of interest is built into the structure.
- Only risk what you can afford to lose. It sounds trite until you see people who put their savings into a product with “guaranteed returns”.
A lesson for those of us who organize, too
Here I need to be self-critical, and not only about myself. FTX bought legitimacy through sponsorship: stadiums, teams, events, media. The events industry and the press took the money and offered the stage and the credibility in return. Everyone, everywhere.
The lesson for organizers and publications is simple and uncomfortable: we need to vet our sponsors much more seriously. Who they are, what licences they hold, who audits their accounts, what they are promising people. A logo on your stage is, in a way, an endorsement. When I wrote about what I learned organizing a crypto event, I talked about community and education. After 2022, I would add: and about filtering.
What comes next
I do not know when or how the market will recover, and I do not believe anyone who claims to. What I do believe is that the next cycle, whenever it comes, will be built on different foundations: less show, more transparency, more self-custody, more regulation. We saw the same with NFTs, caught between art and speculation: once the euphoria fades, only the projects that had a reason to exist remain.
And to be clear: nothing in this piece is investment advice. It is the view of an entrepreneur who has been through a few crises and knows that trust is hard to earn and can be lost in a week.
How did you live through 2022 in crypto? Did you get out, stay in, or move your coins off the exchanges? I would love to hear what lesson you took from this year.