2022 was a terrible year for many global industries but in the financial sector, cryptocurrencies and special purpose acquisition companies incurred the most dramatic nosedive. When introduced, both were promoted as superior alternatives to traditional investments because they are unfettered by government regulation or oversight. But, as investors have discovered, a lack of regulation can contribute to massive financial losses.
Crypto
Even before the FTX debacle, cryptocurrencies were in trouble. Inflation and rising interest rates pulled capital out of volatile crypto networks. Crypto hedge fund Three Arrows declared bankruptcy in July 2022, as did crypto lending businesses Voyager Digital, Celsius, and BlockFi later in the year. Bitcoin, the largest cryptocurrency, has dropped 65% from its peak value of $69,000 in November 2021.
South Korea-based stablecoin company TerraUSD, operating on the Terra blockchain, halted new transactions in May 2022 after its value fell 70%. Supposedly pegged at a stable price of $1, stablecoin is now valued at less than a penny.
Digital assets have lost $2 trillion of market value over the past 18 months. Seventeen of crypto’s wealthiest and most avid investors and founders have collectively lost about $116 billion in personal wealth since March 2022, according to Forbes’ estimates.
Bad actors. Marketed as a currency dedicated to privacy and anonymity, cryptocurrency has become a cesspool of scams, money laundering, and…
