Tribulations and triumphs: The biggest surprises in crypto of 2022

2022 saw the fall of many linchpin crypto and blockchain firms as the May market drawdown shook the industry. It caused many cryptocurrencies to lose value and many investors to pull their money from the market. Furthermore, the unprecedented knock-on effects of the meltdown exposed many blockchain and cryptocurrency firms that were ill-prepared for turbulent times.

However, a collective of companies was able to resist negative market forces and grow amidst the turbulence. The crypto market as a whole continues to grow and has now reached 320 million users.

As we look back on a year full of surprises, we have compiled just a few of the biggest stories that took the industry by surprise.

Binance and the beast

Binance is currently the world’s largest crypto exchange by trade volume. The company has managed to penetrate major crypto markets in recent years, including the United States with its Binance.US subsidiary. The exchange, which features over 300 cryptocurrencies, is estimated to have facilitated the trading of crypto collectively worth approximately $22 trillion in 2022.

Reaching mass crypto adoption could be down to a number of factors; however @cz_binance believes there's one key part missing.Hear it from CZ's MasterClass ⤵️ pic.twitter.com/HwEJu0y0dQ

According to data derived from Similarweb, the platform was consistently getting over 70 million visits a month in the third quarter, which is about double the number achieved by Coinbase, its closest rival.

The crypto exchange made some notable acquisitions in 2022 to boost its geographical coverage. Among them was Sakura Exchange BitCoin, a Japanese crypto trading platform, and Tokocrypto, an Indonesian digital currency brokerage firm.

That said, it has not all been smooth sailing. In December, Binance CEO Changpeng “CZ” Zhao, was forced to downplay concerns regarding a sudden increase in user redemptions after $1.9 billion was withdrawn by users from the platform in 24 hours. Zhao stated that external factors were to blame for the FUD (fear, uncertainty, and doubt) among a section of users.

FUD heightened after the Mazars proof-of-reserve auditing firm paused its collaboration with Binance and other crypto clients. The unexpected turn of events caused investors to become anxious about keeping their money on the exchange.

Dacoco in the Alien Worlds 

Dacoco is the publisher behind Alien Worlds, the highest-ranked gaming metaverse ecosystem in 2022.

The game was able to maintain its position as the most popular GameFi platform in the world in 2022, averaging just over 200,000 unique active wallets daily, according to data derived from DappRadar. This was a worthy surprise considering the stiff competition that Alien Worlds faced. The game had topped the crypto gaming list in 2021, and so retaining its position was an extraordinary feat.

That said, Alien World’s popularity has been boosted by features such as multichain interplay that harnesses the best elements of the WAX, Ethereum, and BNB Smart Chain to improve gaming experiences.

n the #AlienWorlds Missions, Explorers send virtual spaceships on a #AlienWorldsMission to complete tasks throughout #AlienWorldsMetaverse. On return, Explorers receive a portion from #TLM pool for that respective Mission & a Mission #NFT game card. https://t.co/iJbnzl2Z5h pic.twitter.com/9QCbkStC8a

In 2022, Dacoco developers introduced a few innovative concepts to engage users further and enhance democracy in the Alien Worlds ecosystem. Among them were in-game decentralized autonomous organizations (DAOs). The new feature allowed players to use their Alien Worlds Trilium (TLM) coins, the native in-game governance token, to support and regulate any of the six competing DAOs, dubbed “syndicates.”

That said, the platform experienced a few hair-raising moments earlier in the year when there was a steady decline in transaction volume. At some point in March, when volumes were at their lowest, the platform recorded less than 4 million daily transactions. Alien Worlds has since bounced back, and current numbers exceed 13 million daily transactions.

Alien Worlds is set to face some serious competition from some upcoming blockchain gaming projects such as Meta, Decentraland, and The Sandbox once the games truly go mainstream.

A terraforming collapse

Terraform Labs is the blockchain company behind the Terra Classic (LUNC) and TerraClassicUSD (USTC) tokens. The company is based in Seoul, South Korea, and is headed by Kwon Do-Hyung, commonly known as Do Kwon.

The Terra crypto ecosystem is seen as a catalyst to the crypto market plunge that occurred in May that eventually wiped out over 2 trillion dollars from the market. This is after the USTC algorithmic stablecoin depegged from its dollar value and threw investors into a selling frenzy. Very few entities knew about the extent of the damage before the sudden change in market trajectory and many investors were caught by surprise.

A cascade of events, including sudden outsized withdrawals mimicking a bank run, are believed to have led to the eventual collapse of the network.

13/ For those of you whose minds I have not been able to change, I accept your judgement. I continue to think about learnings in #12 and apply it to the systems I work on. Hopefully we can find ways to understand each other at some point.

Billions of dollars worth of the stablecoin and its sister coin LUNC were liquidated within hours due to this turn of events. Terraform Labs executives have faced allegations of manipulation and fund mismanagement. 

What did you do, FTX?

The FTX collapse in 2022 was among the most spectacular surprises in the industry. The implosion saw the exchange’s collateral drop from approximately $60 billion to just $9 billion within months while at the same time facing $8 billion in liabilities due to investors fleeing the firm. The liquidity issues came on suddenly, and few investors could have predicted the crisis.

Press Release pic.twitter.com/rgxq3QSBqm

FTX is currently headed by a new team led by CEO John J. Ray III, who has been involved in the restructuring of several major companies affected by scandal, with the most notable of them being Enron.

CoinShares shows off gains

CoinShares is one of Europe’s largest digital asset investment companies and manages billions of dollars worth of digital assets. The firm’s client base is comprised of institutions and high-net-worth individuals with an affinity for digital asset investments. CoinShares currently has offices in major investment hubs such as Jersey, New York, London, Stockholm and Paris.

What a day! CoinShares is now listed on the @Nasdaq Stockholm exchange. pic.twitter.com/i6CcxWAzv3

2022 was a good year for CoinShares, and its assets under management (AUM) increased by a huge margin. According to the company’s announcement in October, its AUM had increased to $25 billion. This is a considerable increase from the $2.67 billion AUM the firm had reached in June 2021. The positive results came as a surprise, considering that the crypto industry had been on a downtrend since the market crash that occurred in May.

Chainalysis to the rescue

Chainalysis is a blockchain data analysis company that’s renowned for its crypto tracking services that help companies interact with dynamic networks safely. Its clientele includes leading banks, governments, cybersecurity, insurance companies and crypto enterprises such as exchanges that regularly face compliance and transparency issues.

Tracking billions of dollars worth of illicit cryptocurrencies is the name of the game and, in 2022, the company received a bump to its valuation following a Series F funding round. The fundraising event that took place in May saw a capital injection of $170 million and caused the company’s value to rise to $8.6 billion. The jump in valuation was a positive surprise that signaled increased investor confidence in the company as it continued to work on high-profile cases.

"Technology plays a very important role combatting financial crime, but it’s key that companies invest time in building capabilities to use the technology effectively." Joosep Vahtras, Compliance Advisory Lead, Chainalysis, today at the #WorldFintechShow in Saudi Arabia. #crypto pic.twitter.com/gBPmW1EoWs

Chainalysis helped authorities to seize tens of millions of dollars in stolen crypto in 2022. In September, the company helped the authorities to track and impound crypto assets worth $30 million. The funds were part of the $600 million stolen from the Ronin Network.

The company is currently tracking cryptocurrencies pilfered from the FTX cryptocurrency exchange.

Chainalysis is currently facing some increased competition from competitors such as CipherTrace, Elliptic, Scorechain and Coinfirm, which are each coming up with their own unique range of services.

Sinking Three Arrows into the Voyager

Voyager Digital and Three Arrows Capital (3AC) are two companies that were greatly affected by the May crypto market slump. Their downward spiral was fueled by contagion after a sharp market pullback sparked by the Terra meltdown.

Voyager became embroiled in the mayhem after it lent out about $650 million to the Three Arrows Capital hedge fund. 3AC used the money to make risky bets based on the presumption that the cryptocurrency market would continue to climb in the medium term.

Voyagers, as a result of the Chapter 11 filing by @FTX_Official and FTX US we have reopened the bidding process and are in active discussions with alternative bidders. For more information, please read our joint press release with @VoyagerUCC: https://t.co/drtQBEhl4S

However, the Terra collapse was an unexpected development that dragged the company into losses. 3AC had reportedly invested about $200 million in LUNTC, the value of which dropped by over 99% in days. 3AC filed for bankruptcy in July and failed to pay back its loan to Voyager. This added to Voyager’s liquidity problems, forcing it to suspend customer withdrawals and also file for bankruptcy.

A big surprise? Not so much

2022 was a tumultuous year for the crypto industry and tested the crypto market’s resilience against repeated knockdowns. Tough lessons were learned that would make crypto enterprises more accountable in the future. Some events in 2022 also demonstrated that some practices, such as the use of leverage in trading are risky and can lead to significant losses in the event of sudden market movements.

Besides this, 2022 revealed that the crypto sector had the capacity to provide a wide range of innovative fintech and investment opportunities that continue to appeal to different types of investors.