Even by the standards of cryptocurrency, this has been a wild year. It started with British teenagers getting rich by making and selling NFTs from their bedroom and ended with Sam Bankman-Fried, an important figure in the industry, pleading with a judge for bail as he was too vegan for jail. We walk you round what has happened, month by month. The mind boggles as to what could happen next year.
January
Relentless promotion and celebrity endorsements throughout 2021 make non-fungible tokens (NFTs) mainstream. These unique digital items are used to prove ownership, and while they can be used for anything, are most commonly associated with digital art. Benjamin Ahmed, a 12-year-old from Pinner in northwest London whose dad taught him to code at the age of five, makes (on paper) £750,000 selling pixelated whales as digital artwork.
The British Museum announces it will auction NFTs of famous works by JMW Turner as part of an ongoing project. Meanwhile, the world’s first NFT museum opens in Seattle.
February
HMRC seizes NFTs for the first time as part of an investigation into suspected VAT fraud, becoming the first arm of UK law enforcement to confiscate one of the digital tokens. Three people are arrested as part of the £1.4m fraud case, and the taxman says the action is “a warning to anyone who thinks they can use crypto assets to hide money from HMRC”.
March
Those brightly-coloured ATMs you sometimes see which claim to dispense bitcoin? Turns out they may not be fully above board. That’s according to the Financial Conduct Authority, which orders all 81 machines to be shut down, saying that not one of them is operated by a firm with a UK licence for offering cryptocurrency services.
Meanwhile, NFTs continue to dominate the news with Ukraine announcing it will issue NFTs to fund the war effort. It is the country’s latest step into a very modern method of war financing, following an earlier successful appeal for cryptocurrency donations, which raises £38m for the beleaguered country.
By the end of the month, Ukraine’s Meta History: Museum of War NFT project launches with the support of its Ministry of Digital Information. It has since raised $973,500 (£802,787).
April
Bill Clinton, Tony Blair and Katy Perry arrive in the Bahamas. No, it isn’t the start of a joke, it’s an exclusive crypto conference. Co-organised by FTX, a crypto business which is the brainchild of wunderkid Sam Bankman-Fried, Crypto Bahamas brings high-profile guests together with the sandal-wearing vanguard of tech’s new frontier. Blair comments that he feels “a little overdressed” while on stage with Bankman-Fried, who wears a T-shirt and shorts to host the former world leaders.
Back home in the UK, enthusiasm for NFTs has yet to dampen, as then chancellor Rishi Sunak asks the Royal Mint to create an NFT. “This decision shows the forward-looking approach we are determined to take towards crypto assets in the UK,” the Treasury says at the time. The project is still said to be going ahead, though appears to be delayed.
May
The crypto world is shaken when two linked cryptocurrencies – Luna and Terra – plummet in value. Eventually, their deterioration leads to a market crash that wipes almost $45bn of value in a single week.
The founder of both tokens, Do Kwon, faces legal action from both South Korean authorities and disgruntled investors. He also has to deal with the fact that, just a month earlier, he named his newborn daughter after his now-failed digital coin. “Baby Luna,” he said at the time. “My dearest creation named after my greatest invention.” Despite the crash, the baby’s name remains the same.
Someone else living with a constant reminder of the Luna crash is Mike Novogratz, founder of asset management firm Galaxy Digital. Having publicly showed off his Luna-themed wolf tattoo earlier in the year, that took up most of the top bit of his arm.
The investor comes in for mockery in the wake of the cryptocurrency’s collapse, but he seems to take it in his stride. “My tattoo will be a constant reminder that venture investing requires humility,” he tells his followers.
June
The Terra collapse has a huge contagion effect throughout the crypto ecosystem, wiping billions of dollars off cryptocurrency values and pushing some companies to go bust. Bitcoin dips below the $20,000 mark for the first time since 2020.
Investors find various ways to cope with the decimation of their funds. One group is set up on messaging app Telegram specifically for screaming over the state of the market. Users can only send voice notes of themselves screaming.
Amid the chaos, one major player starts buying up the distressed firms. It’s FTX, the company that hosted the swanky Bahamas get-together. Founder Sam Bankman-Fried says he feels a responsibility to rescue the industry.
July
The Twitter and YouTube accounts of the British Army fall victim to a hacker, who uses the profiles to direct followers towards crypto scam websites.
On Twitter, the account’s name and pictures are changed to make it look like the official page of NFT collection “The Possessed”, leaving the Army with a drooling, decapitated cartoon character as its profile picture.
Once the accounts have been returned to their owners, the Ministry of Defence says that the Army “takes information security extremely seriously” and that an investigation into the event is under way. An MoD spokesperson tells i that the probe is still ongoing now.
August
Another famous face joins the crypto world in the form of Martin Shkreli, the “pharma bro” executive who became notorious for jacking up the price of an antiparasitic medication, and later went to prison for (unrelated) securities fraud. Released in May, he launches a new crypto project over the summer, including his own cryptocurrency, Martin Shkreli Inu.
Shkreli is not the only controversial figure to have turned to crypto this year. Socialite scammer Anna Sorokin, aka Anna Delvey, subject of Netflix’s Inventing Anna, launched a collection of NFTs in June. The eccentric ousted founder of WeWork, Adam Neumann, also got in on the action with a “carbon credit crypto project”.
September
The crypto world reacts with about as much tact as you might expect to the Queen’s death. One project launches an NFT depicting her as a skeleton. Several others release commemorative tokens. But for at least one crypto project, the monarch’s death results in a delay. “Bowie on the Blockchain”, an auction of David Bowie-themed NFTs, is postponed out of respect for “the people of the UK and Queen Elizabeth II”.
Bowie fans who aren’t keen on the idea suggest it should be scrapped altogether. But it goes ahead the following month, raising $127,000.
October
Kim Kardashian is fined by US regulators for “unlawfully touting” the crypto asset EMAX, a token created by an anonymous group of developers. The reality star, who had neglected to mention to her followers that she was paid $250,000 for the promotion, is ordered to pay $1.26m.
Meanwhile, no longer chained to the role of Cabinet minister, Matt Hancock has had time to spend on one of his real passions: crypto. The former health secretary gives speeches, writes op-eds, and in October reassures his fellow crypto enthusiasts at an event that the failure of big firms in the space are “a sign of the vibrancy in the market”.
November
All this time, crypto exchange FTX has been building a reputation as the legitimate face of cryptocurrency. Its founder Sam Bankman-Fried, known in the community as SBF, had advocated for crypto regulation and tried to bail out struggling firms in the sector.
This all changes in early November when a series of questions about the company’s balance sheet leads to FTX’s rapid downfall. It files for bankruptcy on 11 November.
John J Ray III, an experienced restructuring expert who has worked on major corporate failures including the Enron scandal, is brought in to replace SBF. As more details emerge about what was going on at FTX, the company’s new chief executive gives his damning verdict on the debacle: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
More from Cryptocurrency
December
Being compared to Enron might make most people feel like hiding under a rock for the foreseeable future, but not Bankman-Fried.
The 30-year-old commences a round of media appearances in which he pleads ignorance. He says he doesn’t know what happened to money missing from FTX’s accounts; he doesn’t know what happened to the firm’s stake in Twitter; he – a touted tech genius – doesn’t even know how to code. If there’s one thing observers of the space have come to expect, it’s more surprises.
Meanwhile, at the time of writing, with bitcoin in the doldrums, Bankman-Fried is due to be released on a $250m bond while he awaits trial on fraud charges related to the collapse of the exchange. 2023 will be a big year for him – as well as all crypto investors.
