Crypto Villains Try to Rewrite History of 2022 Crash

The 2022 crypto crash was a devastating event that wiped out an estimated $40 billion in market value and triggered bankruptcies at several major institutions. Two of the key villains behind the disaster, Do Kwon and Sam Bankman-Fried, have been held accountable for their roles in the collapses. However, they are now trying to rewrite history and downplay their responsibility.

Do Kwon, co-founder of Terraform Labs, pleaded guilty to fraud and manipulation charges tied to the collapse of UST, a stablecoin that lost its $1 peg and led to hyperinflation of the system's underlying crypto collateral. He received a 15-year prison sentence in December. Sam Bankman-Fried was convicted on seven counts, including wire fraud, securities fraud, and money laundering for FTX's misconduct. A judge sentenced him to 25 years in March 2024 and ordered $11 billion in forfeiture.

However, both men are now working to recast their roles in the collapses. Bankman-Fried has claimed that FTX was never technically insolvent and that customers could have been repaid in kind if withdrawals had not been frozen. However, most crypto industry insiders dismiss this argument, pointing out that an exchange's solvency is not just about holding assets, but also about making those assets available to customers when they need them.

The FTX debacle has led to a growing divide between bitcoin and more speculative blockchain use cases. Bitcoin has been relatively stable in recent months, while other cryptocurrencies have suffered heavy losses. The market is still reeling from the 2022 crash, and it remains to be seen whether the industry will recover fully.