Tech
Cryptocurrency 2023 has been marked by fraud and scandals. It was his best year ever
CNN New York –
Cryptocurrencies’ 14th year of existence has been marked by scandals, bankruptcies, fraud and regulatory spats. It still may have been the best year ever for the industry.
The cast of “Crypto 2023” features figures that are now practically synonymous with fraud: Sam Bankman Fried, Changpeng Zhao, Alex Mashinskyand, less noticeably, Heather “Razzlekhan” Morgan and Ilya Lichtenstein (aka ‘Bitcoin Bonnie and Clyde‘).
Despite all the bad press, the young industry has achieved some notable victories.
Bitcoin, the leading cryptocurrency asset, is up 160% this year. Two high-profile court cases have been resolved in the industry’s favor. And a long-awaited approval for a mainstream investment product is expected in January, which could flood the scene with new investors.
Like the rest of the financial world, digital assets have gained impetus from the improving macroeconomic environment cooling inflation, a growing economy and the long-awaited end in sight to interest rate hikes by the Fed.
“It’s been the year of cryptocurrency resilience,” Kyla Curley, cryptocurrency expert and partner at global consultancy StoneTurn, tells CNN.
An important component of this resilience is how US authorities, particularly the Department of Justice, have exercised their regulatory powers over cryptocurrencies, even in the absence of clear regulations.
“Fraud is fraud,” says Curley, “regardless of technology or industry … you can’t stop human nature. Eventually, people will find ways to exploit the rules.”
In 2023, no figure loomed large over cryptocurrencies as Bankman-Fried, the entrepreneur once hailed as a visionary who was found guilty in November of orchestrating a year-long multibillion-dollar fraud through his FTX trading platform.
The SBF trial, as it is widely known, was the show of the year for cryptocurrency’s biggest critics and its most avid fans.
For those inclined to dismiss cryptocurrencies as an elaborate scam, the trial has pulled back the curtain on the unintentional fraud behind FTX, which attracted millions of mainstream investors with its pitch as a beginner-friendly way to get into the assets market emerging digital space. The rapid rise and fall of SBF is now Exhibit A for cryptocurrency detractors.
On the other hand, so are the cryptocurrency faithful who have turned SBF into a billionaire pseudo-savior applauded his convictioncalling the verdict an overdue purge of a bad apple.
A couple of weeks after the verdict, US authorities delivered another crushing blow. Changpeng Zhao, aka CZ, the founder of the most popular cryptocurrency trading platform, Binance, found guilty to money laundering charges as part of a $4 billion settlement.
“2023 was a bad year for scammers and a good year for builders,” says Faryar Shirzad, chief policy officer at Coinbase. “We will enter 2024 with many of the worst scammers out of the market, and that’s a good thing.”
In the two weeks following CZ’s guilty plea, bitcoin rose 23% to hit $44,000, its highest level in 18 months, as investors looked ahead to more positive news on the horizon.
The main event for cryptocurrencies in 2024 could come as soon as next month, when US regulators are expected to greenlight applications for the first time Spot Bitcoin ETFor exchange-traded fund, in the American market.
Simply put, a bitcoin spot ETF allows investors to track the price of bitcoin without actually owning the digital currency. This is attractive to traditional investors for a few reasons. First, it offers everyday investors who are wary of cryptocurrencies a relatively safe way to dive into the notoriously volatile market.
ETFs also trade on traditional stock exchanges, meaning investors can access them through their proven brokerage rather than setting up a new account in the cryptocurrency world. And, of course, the prospect of regulatory oversight adds an extra layer of protection and transparency.
The result: There could be a lot of new money flowing into Bitcoin very soon.
Adding to this bullish sentiment: the bitcoin halving, or, more ominously, the “halvening.”
While often a “buy the hype-sell-the news” type of event, halving tends to push Bitcoin higher. Essentially, bitcoin is a limited asset and every four years the algorithm reduces by half the number of new tokens that can enter circulation (hence the name).
“The halving is the ultimate geek event for Bitcoiners in 2024,” Antoni Trenchev, co-founder of cryptocurrency lender Nexo, said in a note. “So if history repeats itself… we may not see Bitcoin peak until 2025, with 2024 serving as the gateway to the main event.”
Trenchev said the “twin-turbo boost” from the spot ETF approval and halving, expected in the spring, should push Bitcoin to $100,000, a 45% jump from its all-time high of $69,000, reached in November 2021.
“The road to $100,000 will be lined with unexpected potholes and double-digit declines like Bitcoin.” said Trenchev. “To borrow a phrase from one of his biggest detractors, Warren Buffett, ‘he transfers money from the impatient to the patient.’”
For an even more bullish prediction, look to Anthony Scaramucci, the founder of SkyBridge Capital and a longtime bitcoin evangelist.
“Bitcoin closes the year at $140,000” She said the digital information point Semafor.