Crypto 2023 in review: the most significant events that shaped the industry

Emphasizing progress and challenges, the crypto review 2023 details crypto’s successes, failures, and notable legal and regulatory hurdles.

The crypto market review 2023 reflects a transformative phase for crypto, with Bitcoin (BTC) experiencing over a 100% increase year-to-date (YTD) amid global economic challenges.

This year, the number of crypto users swelled to around 575 million. Innovations weren’t scarce either, particularly in domains like stablecoins and blockchain-based social media. 

While traditional stablecoins like USDT and USDC continued to dominate, platforms like friend.tech led the surge in socialfi, marking a new chapter in digital interaction.

Although the crypto industry overview shows a dip in fundraising, down to $7.96 billion, it also reveals a sustained interest in derivatives trading over spot trading. 

Security remained a critical focus, with a decrease in the total losses from hacks compared to previous years, yet it’s still a significant concern at $3.7 billion lost.

Regulatory movements, particularly in the EU and the UK, played a crucial role in shaping the crypto market, while in the U.S., institutions like PayPal and Blackrock showed increased interest in the crypto space. 

As we conclude this year in review, let’s look at major events and highlights that shaped this year.

FTX trial

The FTX trial was undoubtedly one of the biggest crypto events in 2023. Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, faced a high-profile trial following the company’s dramatic bankruptcy in November 2022.

Prosecutors accused Bankman-Fried of using customer funds for various purposes unrelated to FTX’s operations, including risky investments, property purchases, and political campaigns. 

In a significant development this year, Bankman-Fried was found guilty on all charges, including fraud, embezzlement, and criminal conspiracy, following a month-long trial and over four hours of jury deliberation. He now faces up to 110 years in prison, with his sentencing due in March 2024.

This trial’s outcome, which came almost a year after FTX’s bankruptcy, highlights the importance of rigorous oversight and ethical management in the crypto space, setting a precedent for how similar cases might be handled in the future.

Binance’s regulation issues

In 2023, Binance, one of the largest cryptocurrency exchanges globally, faced significant regulatory challenges, marking another key development in the crypto market overview for the year. 

Binance reached a settlement with the Commodity Futures Trading Commission (CFTC) and the U.S. Treasury Department, which was negotiated by the Justice Department (DoJ). This settlement addressed violations of U.S. anti-money laundering and sanctions laws. 

The CFTC, which is responsible for overseeing commodities and derivatives markets, including Bitcoin, has been investigating Binance since 2018 for possible money laundering and sanctions violations. 

It was found that Binance processed at least $10 billion in payments for entities seeking to evade U.S. sanctions. As a result of these investigations, Binance was accused of willful evasion of U.S. law and failure to implement compliance procedures designed to prevent and detect financing of terrorism and money laundering​​.

In response to these challenges, Binance underwent significant organizational transformations, including enhancing its anti-money laundering detection and analytics capabilities and establishing stringent know-your-customer (KYC) procedures. 

CZ resignation 

In November 2023, the cryptocurrency landscape witnessed the resignation of Changpeng Zhao, commonly known as “CZ,” from his position as CEO of Binance, making it a notable chapter in the overview of cryptocurrency in 2023.

CZ’s resignation followed a settlement with the U.S. government, where Binance was hit with criminal charges. As part of a $4.3 billion settlement, CZ agreed to step down from his role as CEO. 

This settlement came after a series of investigations into Binance for various legal violations, including anti-money laundering breaches. The circumstances leading up to CZ’s resignation were complex, involving multiple regulatory bodies like the DoJ and CFTC.

Despite the turbulence surrounding CZ’s departure, Binance continued its operations and continued doing business as usual, alleviating fears of an FTX-style bank run.

Following his resignation, Richard Teng, previously Binance’s Global Head of Regional Markets, took over as CEO, bringing in vast experience in financial services and regulation.

Ripple vs. SEC

The legal battle between Ripple Labs Inc. and the U.S. Securities and Exchange Commission (SEC) significantly impacted the crypto market review in 2023, given its implications for the regulatory treatment of digital assets.

In a crucial decision, U.S. District Judge Analisa Torres ruled that Ripple’s sales of its XRP token on public exchanges did not violate federal securities laws. This judgment marked the first major legal victory for a cryptocurrency company against the SEC. 

Following the ruling, the value of XRP surged, reflecting the market’s positive response to the outcome. The court’s decision, specific to the facts of the Ripple case, is likely to influence other crypto firms’ ongoing legal battles with the SEC.

However, the SEC achieved a partial victory in the same case. The court found that Ripple’s direct sales of XRP to sophisticated investors, amounting to $728.9 million, constituted unregistered sales of securities. A trial in the Ripple case is scheduled for Apr. 23, 2024.

The outcome of the Ripple case has substantial implications for the SEC’s enforcement efforts against crypto exchanges and intermediaries, making it a critical event in the year in review.

Do Kwon’s trial in Montenegro 

In 2023, the trial of Do Kwon, a key figure in the cryptocurrency world and former CEO of Terraform Labs, became a significant event in the crypto market overview for 2023. 

Do Kwon faced legal issues in Montenegro, where he was sentenced to four months in prison for using forged passports. He and Han Chang-joon, Terraform Labs’ former finance officer, were detained as they attempted to board a flight to Dubai. 

The Montenegrin authorities found doctored Costa Rican passports, a separate set of Belgian passports, laptops, and other devices in their luggage. 

This development followed the collapse of the stablecoin TerraUSD in May 2022, which had significant repercussions in the crypto markets.

The trial in Montenegro was part of a broader set of legal challenges for Do Kwon. In addition to facing charges in Montenegro, he was also indicted in the U.S. on eight counts, including securities fraud, wire fraud, commodities fraud, and conspiracy. 

The Montenegrin court’s decision on extradition, whether to South Korea or the United States, was pending upon the completion of his prison sentence for document forgery.

Do Kwon’s legal situation and its implications underscore the need for compliance and transparency within the crypto industry, a theme that has been increasingly prominent in the year in review for the crypto sector.

Bitcoin above 40k

Throughout 2023, Bitcoin experienced a notable surge. It had impressively risen above $40,000 by December, reaching a 20-month high. 

This rise was attributed to the widespread optimism regarding the potential approval of a spot bitcoin ETF by the U.S. securities regulator. 

The year proved to be a surprisingly good one for Bitcoin, which has already seen a leap of over 130% since the start of the year, outpacing traditional assets like gold and the S&P 500.

Bitcoin’s share of the total cryptocurrency market also increased significantly, going from 38% to above 50%.

This resurgence was a critical highlight in the year in review for the cryptocurrency market and indicated renewed investor confidence in Bitcoin and other digital assets​​.

Bitcoin ETF struggles

The journey towards the approval of a spot Bitcoin ETF in the U.S. has been a significant theme in the crypto market overview 2023. 

As of December 2023, several asset managers have applied for a spot Bitcoin ETF, including BlackRock, Fidelity, VanEck, ARK 21Shares, and several others. 

These companies have been involved in detailed discussions with the SEC, focusing on critical aspects such as custody arrangements, investor risk disclosures, and creation and redemption mechanisms of the ETFs​​.

The approval of a Bitcoin ETF is expected to open the doors for a broader range of investors, including retail and institutional investors, to gain exposure to Bitcoin in a regulated framework without the complexities of managing a crypto wallet or dealing with crypto exchanges​​.

The SEC has historically been skeptical about Bitcoin ETFs, citing concerns about market manipulation and the need for adequate investor protection. 

However, a ruling in favor of Grayscale’s application by the U.S. Court of Appeals in 2023, which found the SEC’s rejection of the ETF application to be unjustified, has increased optimism for potential approvals​​​​.

The approval of a Bitcoin ETF would represent a significant milestone in the crypto market review 2023, signaling a maturation of the cryptocurrency market and potentially altering the performance and trends observed in the industry this year.