The 2022 crypto winter was arguably the darkest interval in crypto historical past. Billions of {dollars} in market worth evaporated whereas all the trade’s future hung by a thread.
Right this moment, many gamers who contributed to the extreme downturn stay imprisoned, await sentencing, or proceed to repay their money owed.
A Tooth-Chattering Winter
The notorious crypto winter broke unfastened as a consequence of many components that started to unfold in early 2022 and intensified all year long.
Nonetheless reeling from the COVID-19 pandemic, the worldwide economic system confronted important challenges, together with hovering inflation, rising rates of interest, and widespread recession fears. These financial headwinds created a difficult atmosphere for the cryptocurrency market, contributing to its downturn.
Past these broader financial pressures, particular occasions inside the crypto market intensified the downturn, resulting in a widespread disaster throughout all the trade. Among the many most notable occasions had been the collapse of FTX and Terra-Luna, the Three Arrows Capital default, and the chapter of main crypto lending platforms.
These outstanding failures and alleged frauds completely linked a number of people, akin to Sam Bankman-Fried, Caroline Ellison, Do Kwon, and Alex Mashinsky, to call just a few, with the crypto winter.
Three years later, the crypto trade has achieved a major restoration, maybe viewing that difficult period as firmly up to now. But, these accountable are nonetheless coping with the repercussions. The place are they now?
Sam Bankman-Fried (FTX Change)
Sam Bankman-Fried (SBF), the founder and former CEO of the FTX alternate, is serving a 25-year sentence in a federal jail in California. In keeping with current studies, SBF could get a diminished sentence by over 4 years as a consequence of credit for good conduct and potential participation in jail packages. If that occurs, he shall be launched by 2044.
In late 2023, SBF was convicted of fraud and conspiracy for orchestrating a scheme that misused billions of {dollars} in FTX buyer funds.
FTX, which filed for Chapter 11 chapter in 2022, is nearing its conclusion. The method proved surprisingly profitable, recovering over $14.5 billion in property. In Could, FTX introduced that it anticipates having the ability to repay 100% of the chapter declare quantities plus curiosity to non-governmental collectors.
Caroline Ellison (Alameda Analysis)
Caroline Ellison was the CEO of Alameda Analysis, a quantitative crypto buying and selling agency based by SBF that turned inextricably linked to FTX. She is at present serving a two-year jail sentence for her function within the fraud.
Ellison began her sentence at a low-security federal jail in Connecticut in early November 2024. She acquired a considerably diminished sentence as a result of she cooperated extensively with authorities, together with testifying towards Sam Bankman-Fried at his trial. Like Bankman-Fried, her sentence was lately shortened by just a few months for good habits.
Alameda Analysis was the primary vacation spot for the misused FTX buyer funds. FTX reportedly channeled billions of {dollars} to the buying and selling agency to cowl its money owed and fund its actions. Like FTX, Alameda Analysis filed for chapter in 2022 and is not an energetic buying and selling agency.
Its remaining property at the moment are a part of the bigger FTX chapter proceedings.
Do Kwon (Terraform Labs)
Do Kwon, co-founder of Terraform Labs, remains to be awaiting trial for the catastrophic collapse of his firm’s stablecoin TerraUSD and sister token Luna in Could 2022. Inside days, this occasion wiped an estimated $40 billion to $60 billion in market capitalization from the crypto ecosystem.
Officers arrested him in Montenegro in March 2023 for utilizing falsified journey paperwork. After quite a few authorized battles, Do Kwon was extradited to the US in December 2024 to face federal felony costs.
As soon as within the US, a federal grand jury indicted him on a number of felony counts, together with securities, commodities, wire fraud, conspiracy, and cash laundering. Do Kwon has pleaded not responsible to all costs. His felony trial in a New York District Courtroom is scheduled to start in January 2026.
Final yr, the US Securities and Change Fee (SEC) discovered Do Kwon and Terraform Labs accountable for civil fraud. They tentatively agreed to a settlement with the SEC, which included substantial monetary penalties. This settlement successfully banned Kwon and Terraform from the securities trade.
In the meantime, Terraform Labs filed for chapter in January 2024 and is at present present process liquidation. This course of entails promoting off its remaining property to satisfy its monetary obligations and resolve excellent claims.
Alex Mashinsky (Celsius)
Alex Mashinsky, former CEO of Celsius Community, is serving a 12-year federal jail sentence after pleading responsible to commodities and securities fraud. Sentenced final Could, he additionally faces three years of supervised launch, a $50,000 wonderful, and forfeiture of $48.4 million in unlawful proceeds.
Celsius Community promised excessive rates of interest on crypto deposits, however Mashinsky’s security assurances proved false. The platform engaged in dangerous, undisclosed investments, together with uncollateralized loans. Mashinsky was additionally accused of inflating Celsius’s token (CEL) value and profiting personally from its sale.
Because the crypto market faltered in mid-2022, Celsius froze all buyer withdrawals on June 12, trapping billions. It filed for Chapter 11 chapter a month later, deepening the crypto winter’s influence.
Celsius has since emerged from chapter, restructuring its operations. It has begun distributing over $3 billion to collectors, who now collectively personal a brand new Bitcoin mining firm, Ionic Digital, Inc. Celsius can also be pursuing a $4 billion lawsuit towards Tether for alleged improper liquidation of Bitcoin collateral throughout its collapse.
Su Zhu and Kyle Davies (Three Arrows Capital)
Su Zhu and Kyle Davies, co-founders of the once-prominent crypto hedge fund Three Arrows Capital (3AC), are nonetheless largely embroiled in authorized disputes.
Zhu was arrested in Singapore in September 2023 for contempt of court docket, served a four-month jail sentence, and has since been launched, although appeals towards court docket summonses proceed. Davies has largely evaded liquidators. Each founders face nine-year bans from Singapore’s monetary regulator.
3AC’s aggressive, extremely leveraged buying and selling methods and important publicity to the Terra ecosystem proved disastrous. When TerraUSD de-pegged, and Luna crashed in Could 2022, 3AC suffered large losses and failed margin calls from quite a few lenders.
This insolvency and subsequent liquidation in June 2022 created a major contagion impact, inflicting main misery for crypto lending platforms that had lent closely to 3AC, cementing its function as a main catalyst for the 2022 crypto winter.
3AC stays underneath liquidation and is managed by court-appointed liquidators. They goal to recuperate property for collectors who collectively filed over $3.5 billion in claims.
Disclaimer
Following the Belief Undertaking tips, this function article presents opinions and views from trade consultants or people. BeInCrypto is devoted to clear reporting, however the views expressed on this article don’t essentially mirror these of BeInCrypto or its employees. Readers ought to confirm data independently and seek the advice of with an expert earlier than making choices primarily based on this content material. Please be aware that our Phrases and Circumstances, Privateness Coverage, and Disclaimers have been up to date.