The year is coming to a close, and it’s time to look back to see how the crypto industry has changed since the turbulent 2022. Read our digest from the most impactful cryptocurrency news about ten events that defined crypto in 2023.
Ethereum’s Shapella hard fork executed on mainnet
Cointelegraph published the original article on April 12, 2023.
The Ethereum merge, an update that changed its consensus algorithm from Proof-of-Work to Proof-of-Stake, was only partially done in 2022. The development went further this year, and this phase in Ethereum’s development was finally completed.
On April 12, a combined upgrade for consensus (called Capella) and execution (Shanghai) layers was activated. In addition to a few technical tweaks, it introduced a change Shapella upgrade is best known for: unlocking ETH stakes. The completion of the PoS transfer sent waves through the ETH markets, as well as liquid staking token markets. Nevertheless, it is still feasible to use these protocols, as well as other modes of ETH staking that are an alternative to running a full node.
Circle was SVB’s biggest client: report
Blockworks published the original article on June 23, 2023.
This headline came late into the news cycle that had to do with Silicon Valley Bank (SVB) and its seemingly sudden collapse in the spring of 2023. The relationship between it and Circle, the issuer of the USDC stablecoin, is now rather clear from the Blockworks’ headline.
In March, the bank’s parent company, SVB Financial, posted a fundraising notice out of the blue, hinting that not all was well with the company’s financials. It triggered a bank run intense enough to lead to the bank’s collapse.
Circle ties into the story around that time, when the news reached its customers, and they started to request redemptions in large amounts. A large part of the reserves backing USDC was stored in SVB and had Circle become creative with redeeming, while USDC depegged to as low as 88 cents. Luckily, the SVB deposits were FDIC-insured, which saved Circle from failing to meet its obligations.
While the USDC peg was restored, its market share took a huge blow, which led to the stablecoin losing its place in the top ten cryptocurrency ranking by market cap.
Recently Exploited Crypto Bridge Shuts, Says China Detained CEO and His Sister
CoinDesk published the original article on July 14, 2023.
If you had used the Multichain bridge or held MULTI as this crypto news story was developing, it must have been a nerve-wracking ride. Before mid-2023, Multichain was a rather popular cross-chain bridge that had seen millions of inflows daily. We have picked the CoinDesk’s headline about the news story’s culmination as it packs a few of the craziest moments in the whole extraordinary ordeal at once.
At first, contact with Multichain’s CEO was lost, making it harder for the team to maintain business as usual. The team would soon learn that many of the protocol’s node servers were running under his personal account. Then, a hacker used this situation to their advantage, exploiting the bridge for an estimated $130 million worth of tokens across the supported blockchains. As the team was scrambling to repair the damages, they chose to break the news: the CEO was taken into police custody months ago. The confiscated belongings included their electronics, hardware wallets, and notes with mnemonic phrases, and the operational funds and investments were also under the CEO’s control all along. His sister, who received control over some of the nodes and assets, was also arrested in early June.
With nothing else left to do, the team came clear about the whole incident and sought to have the front end closed down by the domain registrar because they had no way to do it themselves. At least, this is how the official story goes. At the end of the day, even the official version had the crypto community appalled at the centralized state of some supposedly decentralized services.
Ripple’s Legal Win: A Precursor to U.S. Regulatory Clarity?
CryptoBriefing published the original article on July 18, 2023.
On the other hand, XRP holders were on the ball in 2023. The long-winding legal battle of the parent company Ripple with the U.S. Securities and Exchange Commission (SEC) finally brought some of the most triumphant episodes for the XRP crowd.
One: in July, the judge ruled that the sales of XRP tokens did not constitute a security offering in some cases. The crypto community took the news as “XRP deemed not security” and ran with it. Still, despite the caveat, it provided a lot of long-awaited clarity not only to XRP but to many other crypto assets as well.
Two: in October, the charges brought up by the SEC against Ripple’s CEO Brad Garlinghouse and CTO Christian Larsen were finally dropped. With no charges to press, the only thing in the Ripple vs. SEC left to handle is the fine, which can potentially reach up to $770 million. Lawyers expect the proceedings to take place in spring 2024.
So, the titular “legal win” was just one in the series of favorable rulings that brought the case closer to resolving in Ripple’s favor. What about the second half of the headline? Will the resolution become a cornerstone of the legal framework’s foundation for the United States? The representative of the Commodities Futures Trading Commission (CFTC), which also has some experience with crypto-related cases, seems to believe so. Instead of classifying all crypto assets except for Bitcoin as securities, a more flexible approach should be possible if the SEC loses this case.
JPMorgan says Curve contagion contained, but DeFi ‘shrinking or stalling’
The Block published the original article on August 3, 2023.
Meanwhile, just a month after Multichain, another incident in the decentralized finance (DeFi) industry gave the community a serious spook. In late July, Curve Finance’s liquidity pools were exploited with a Vyper programming language vulnerability. Exploiter(s) drained the pools of $61 million worth of collateral and caused $1.5 billion more to be withdrawn.
Immediately after, the protocol’s founder Michael Egorov started offloading CRV to recoup the losses and avoid liquidation. Reportedly, he sold 72 million CRV to secure over $100 million worth of debt. Egorov’s efforts were supported by donations from Justin Sun, Huobi’s Jun Du, and other large investors.
Curve Finance at the time of writing accounts for a $1.8B total value locked (TVL) and a considerable number of DeFi protocols have exposure to CRV or the protocol. The Curve DAO is finalizing the reimbursement plan for the liquidity providers affected by the attack. If the damage had not been sustained, crypto in 2023 could have seen another fallout of a similar magnitude to Terra or FTX.
PayPal’s Stablecoin Debut Faces Headwinds, Bank of America Says
Bloomberg published the original article on August 11, 2023.
All the way back in 2021, digital payments giant PayPal entering the crypto industry caused a big stir. When they added cryptocurrency purchases in 2022, it was celebrated but their coming out with yet another stablecoin in 2023 saw a lukewarm reaction.
One reason for this is that the crypto market is saturated with dollar stablecoin offerings as it is. Around the time of the PayPal USD (PYUSD) rollout, the top-100 had eight different stablecoins pegged to the U.S. dollar. Secondly, PYUSD had its share of problems at launch, and the lack of ability to withdraw it to an external wallet didn’t do it any favors.
Lastly, according to the Bank of America, in the future, PayPal USD will face competition from central bank digital currencies (CBDC) and other yield-bearing stablecoins. As of 2023, they are mostly recognized as securities, but with the progress in the legal field, their status may become clearer.
Worldcoin Hits New Sign-Up Record Despite 48% Decline In WLD Price
Bitcoinist published the original article on August 31, 2023.
Another crypto news highly descriptive of the 2023 state of tech is anything having to do with Worldcoin. The Worldcoin project started in 2021, and by this year managed to become an ecosystem of hardware and software solutions for a global identification system with the potential to introduce universal basic income — at least, on paper.
The Worldcoin (WLD) cryptocurrency was launched in July, although the process of signing up to the airdrop ha started as early as last year. The process of creating a World ID involves having one’s iris scanned with a special device called “The Orb”. This biometric data corresponds to one human being and is supposed to be effective in distinguishing real people from the AI, a so-called “Proof of Personhood”.
Due to this very process, Worldcoin became highly controversial. The company’s ability to securely store huge amounts of sensitive personal data without it leaking or to provide enough protection against spam and impersonation has been repeatedly called into question. The very premise of the project raised some eyebrows: the co-founder of the lead development company for Worldcoin, Sam Altman, is better known as the CEO of OpenAI, the company that made a breakthrough this year with generative AI (ChatGPT and DALL-E). In other words, the people who made spam and bots indistinguishable from real people on the internet are now selling the world a solution to the consequences of their actions.
As a crypto asset, though, Worldcoin (WLD) had an interesting journey in 2023. As the chosen headline suggests, its price action has been mostly decoupled from the news surrounding it. More eyes for the Orbs? WLD keeps slipping. OpenAI ousts Sam Altman as the CEO? New ATH. And who even knows, what 2024 has in store for AI and Worldcoin?
Sam Bankman-Fried’s trial is over — what now?
Protos published the original article on November 3, 2023.
Another legal battle that started long before reached its culmination in 2023. This time, we are talking about the poster boy of the FTX implosion: former CEO Sam Bankman-Fried (SBF). The legal proceedings in the United States v. Samuel Bankman-Fried case dragged on for about a year after the crypto exchange went down in November 2022.
The sentencing hearing that will conclude the case is scheduled for March 2024, so why did crypto media report it as a done deal? The November, 2 hearing featured a jury that reached a verdict of guilty on seven charges raised. Whether or not SBF gets convicted is out of the question, and the only thing left to clarify is for how long: the 110 years asked by the prosecution or a more realistic 25 years.
The news about the trial was coming in a steady stream as it was proceeding, following every twist and turn: from campaign finance violation allegations to damning witness testimonies and the involvement of SBF’s parents. It’s no wonder much attention was paid to the trial: for the many seeking justice in FTX’s aftermath, SBF turned out to be the most responsible. Meanwhile, life goes on, as the crypto market 2023 recovers and ex-FTX executives go on to their own business.
Ex-Binance CEO CZ Facing 10 Years Behind Bars
U.Today published the original article on November 26, 2023.
Now, here is a headline only the staunchest of the skeptics expected to see in 2023. Changpeng Zhao (CZ) Ex-CEO of Binance? Facing jail time? Reality often beats the wildest fiction.
CZ and Binance have been in the crosshairs of the U.S. Department of Justice (DoJ) since at least May 2021, although CZ’s comment clarified that the exchange was willingly collaborating with legal requests. Before that, in March of the same year, the CFTC started its own investigation into Binance. However, the vague threat of legal action finally took shape in June 2023, when the U.S. SEC sued CZ and Binance.
At the time, it seemed that this would be the extent of Binance’s troubles. What came as a surprise, though, was the timing of indictment from the DoJ, accusing CZ of sanction violations and money laundering. Only a week after, Binance came forward with an unprecedented settlement: CZ would step down as the CEO, and Binance would be under supervision for years and pay $4 billion in settlements. Notably, the quick resolution not only dropped the CFTC charges but also was deliberately designed to keep Binance operational and avoid the FTX scenario.
Rising Bitcoin Fees Prompt Renewed Battle Over Ordinals, BRC-20 Tokens
Decrypt published the original article on December 7, 2023.
Last but not least, another captivating development that emerged in 2023, although was years in the making: digital artifacts on Bitcoin, tied to Ordinals. The new feature also became controversial, reviving the Bitcoin community and almost threatening to cause a new schism.
Still unsure what ordinals and inscriptions are? Simply speaking, this is digital content recorded in the metadata attached to individual sats with ordinals tracking them like serial numbers. If you have got a few minutes, read our guide on them!
The metadata is limited to 4 MB, and the inscription creators use this generous limit to their hearts’ content. The abundance of transactions with ordinals and BRC-20 tokens has led to rising block space usage and as a consequence, rising transaction fees. Miner revenues are on the rise again, the Bitcoin community is taking a new breath, what’s not to love? Well, there is also network congestion and, once again, rising transaction fees. According to Bitinfocharts, the Bitcoin transaction fees in December 2023 are on the same level as in April 2021, when the BTC price was closer to $60K.
Bitcoin maxis are not thrilled with the influx of newcomers seeking to capitalize on the trend, either. To the old guard, inscriptions are spam enabled by an exploit, something to be fixed as soon as possible. Of course, this reaction has met counteraction as well, as miners would not like to give up a new source of revenue that easily, and ordinals users are just getting started.
VanEck predicts that ordinals might be what makes the NFT market cool again in 2024. While Ethereum still has the lead, the Bitcoin-based NFT-likes pose a decent alternative to the ERC-721 tokens.
Summing Up
2023 in crypto was an exciting year, with the breakthrough in generative AI and a revival of Bitcoin through Ordinals, as well as a multitude of other news. With a Bitcoin halving coming in 2024, the current events are sure to set up an even more exciting year in crypto.
If you enjoyed this crypto news 2023 recap, give the other articles in our blog a read. We are also on social media: follow ChangeHero on Twitter, Facebook, Reddit, and Telegram.
