What happened in crypto in 2023

Bitcoin prices started recovering and India was a significant player this year in the crypto sector, even as blockchain technologies and the services built on them were lashed by legal penalties

2023 saw FTX’s ex-CEO Sam Bankman-Fried being convicted a year after the crypto exchange’s sudden collapse [File] | Photo Credit: REUTERS

There is far more to the world of crypto than just that day’s price of Bitcoin. 2023 marked momentous shifts in the blockchain playing field as U.S. regulators brought tech billionaires to task while India became a major crypto adopter, setting the stage for what could be a 2024 filled with legal drama and strife.

Here are just five compelling sagas which unfolded in the blockchain sector this year:

The FTX saga comes to a close (almost)

The FTX cryptocurrency exchange run by the eccentric, wild-haired billionaire Sam Bankman-Fried, known for his luxurious lifestyle and multi-million dollar political donations, collapsed in November 2022. Almost a year later, the ex-CEO was convicted on seven criminal charges related to fraud and money laundering, as it was learned that FTX customer funds were misused to support a sister company called Alameda Research.

During the legal proceedings that stretched through this year, Bankman-Fried’s former colleagues, including a past romantic partner, testified that he knowingly broke laws and issued orders that hurt his customers. Bankman-Fried’s court appearances during the trial were chaotic, he was jailed for witness tampering, and he presented himself as a businessman let down by his officials rather than as a malicious crypto criminal.

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His sentencing is set for March 2024 and could lead to him spending decades in jail. Meanwhile, FTX debtors and liquidators in December agreed on a global settlement to help customers get back some of their assets.

Binance’s billionaire CEO steps down

The Chinese-born Canadian crypto tycoon and billionaire Changpeng Zhao was known as the head of Binance, the world’s largest crypto exchange. Binance has in the past halted operations in several countries due to regulatory crackdowns, but this year saw the exchange agreeing to pay a massive settlement of roughly $4 billion to the U.S. government in late November for its illegal activities. In addition to this, Zhao pleaded guilty to a felony related to his failure to prevent money laundering on Binance, and stepped down as CEO.

U.S. Treasury Secretary Janet Yellen said Binance enabled more than 100,000 transactions violating U.S. sanctions, including ones linked to Hamas’ al-Qassam Brigades, al-Qaeda, and even sexual abusers. The crypto exchange will be monitored as it is forced to formally exit the U.S. market.

Zhao’s vocal influence in the sector is undeniable; his critical tweets about FTX’s business practices in 2022 are credited with sparking the mass panic in which users all tried to pull out their funds from FTX, accelerating the exchange’s collapse. Zhao’s sentencing is due to take place in the U.S. next February.

Worldcoin’s formal launch

OpenAI CEO Sam Altman was a controversial figure in the crypto community long before he became a major player in generative AI this year. His blockchain project, Worldcoin, aims to create a biometric database of the human population in exchange for giving them access to crypto and a digital ID which has been compared to India’s Aadhaar number. The initiative was severely criticised by privacy advocates, including Edward Snowden, during its trial run in 2021. Altman this May raised $115 million for the project, whose crypto tokens are not available to U.S.-based users.

As OpenAI’s ChatGPT sparked off an AI boom and Altman flew around the world to discuss AI regulation with state leaders and top technologists, he formally launched Worldcoin. “Operators” across the world began collecting millions of iris scans by giving people the Worldcoin cryptocurrency in return. Worldcoin has also penetrated India, with “orb operators” in cities such as Delhi and Bangalore encouraging people to get scanned. Activists in countries such as Indonesia have accused Worldcoin volunteers of coercing impoverished people to hand over their biometric data, without getting their informed consent.

Worldcoin token prices fluctuated wildly in November this year as Altman was fired as the CEO of OpenAI, before getting hired by Microsoft and then being reinstated at OpenAI.

India tops in grassroots adoption

2023 was another year in which India’s grassroots adoption of crypto raced far ahead of the legislation meant to regulate it, as blockchain analytics platform Chainalysis ranked the country first in its 2023 Global Crypto Adoption Index released in October. Furthermore, India ranked second in terms of raw estimated crypto value received between July 2022 and June 2023, recording around $250 billion in crypto value in the past year. For comparison, the U.S. recorded roughly $1 trillion in crypto value during the same period.

However, as grassroots crypto adoption grows, so does the number of scammers targeting victims who may not be familiar with blockchain technology. In the latter half of 2023, Indian authorities investigated the Solar Techno Alliance (STA) Ponzi scheme. The STA crypto scam may be one of India’s largest so far, as it involved an amount of around ₹1,000 crore and 2 lakh people, per the Odisha police.

Rise of Bitcoin

From prices as low as below $17,000, Bitcoin [BTC] has made a slow but significant recovery as it moves towards the $45,000 mark, which it has not yet successfully touched this year. Geopolitical shocks such as Russia’s invasion of Ukraine in 2022 shook the sector badly, but 2023 has seen price consolidation and relative stability in what is a naturally volatile market. Bitcoin’s rise has a similar effect on other top crypto coins and tokens, so several popular assets are on an upward trajectory. Out of the maximum supply of 21 million Bitcoin, more than 19 million BTC were in circulation as of late December.

A screenshot showing Bitcoin’s price trajectory in the past year | Photo Credit: CoinMarketCap

Bitcoin is up by 161.26% in the past year, according to CoinMarketCap statistics, but crypto’s largest coin by market capitalisation is far from its 2021 highs when it crossed $65,000 in price. Ethereum’s Ether [ETH], the second biggest cryptocurrency by market cap, is up by 83.54% in the past year.