2022 was a year that redefined the cryptocurrency landscape—not through growth or innovation alone, but through a series of seismic collapses, ethical failures, and unexpected breakthroughs. What began with optimism around technological milestones like The Merge ended in chaos, marked by exchange bankruptcies, algorithmic stablecoin failures, and massive investor losses. Yet amid the turmoil, crypto also proved its resilience and potential for real-world impact.
This article explores the 10 most pivotal events of 2022 that shaped the trajectory of digital assets—from devastating crashes to humanitarian use cases and foundational upgrades.
FTX Collapse: The Fall of a Crypto Titan
It started with a CoinDesk report exposing financial irregularities at Alameda Research, the trading firm founded by Sam Bankman-Fried (SBF). The revelations triggered a chain reaction. Binance CEO Changpeng Zhao announced plans to liquidate FTX’s native token, FTT, citing concerns over transparency. Users panicked.
Over a single weekend in early November, approximately $6 billion was withdrawn from FTX. As withdrawals stalled and trust evaporated, the platform’s fate became clear. On November 8, FTX admitted defeat, seeking acquisition by Binance—only for the deal to collapse days later.
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The exchange filed for bankruptcy, revealing a catastrophic commingling of customer funds and reckless risk-taking. John J. Ray III, appointed as interim CEO, described it as “the most complete failure of corporate controls” he’d ever seen.
SBF was later arrested and extradited to the U.S., facing up to 115 years in prison. Creditors may face a decade-long recovery process—echoing the long aftermath of Mt. Gox’s 2014 collapse.
Luna’s Epic Crash: When Algorithmic Dreams Died
Before FTX, there was Terra (LUNA) and UST—an ambitious attempt to create a decentralized, algorithmic stablecoin without collateral. The system relied on arbitrage mechanics between LUNA and UST to maintain price stability.
But when confidence wavered in May 2022, the mechanism failed spectacularly. As UST lost its dollar peg, the protocol minted more LUNA to absorb selling pressure—flooding the market and triggering a death spiral.
In days, LUNA’s supply ballooned from 340 million to 6.5 trillion tokens, crashing its value from over $80 to near zero. A **$40 billion** market cap vanished almost overnight.
While a rebranded "Luna 2.0" launched afterward, it failed to restore trust. The fallout rippled across DeFi, taking down lenders and funds exposed to the ecosystem.
The Fall of Three Arrows Capital (3AC)
Once hailed as crypto’s top hedge fund, Three Arrows Capital (3AC) collapsed under the weight of its Luna exposure and broader market downturn.
Co-founder Kyle Davies admitted losses exceeding $600 million from the Terra crash. Already leveraged, 3AC faced margin calls as prices of Bitcoin, stETH, and Grayscale Bitcoin Trust (GBTC) dropped. Its final blow came when positions on FTX were liquidated.
With debts estimated at $3.5 billion, 3AC filed for liquidation—dragging down Genesis, Voyager Digital, and other lenders who had extended credit based on inflated valuations.
Ukraine’s Crypto Fundraising Success
Amid the darkness, a bright spot emerged: Ukraine’s use of crypto for war relief.
Following Russia’s invasion in February 2022, Ukraine publicly requested donations in Bitcoin, Ethereum, and USDT. The campaign raised nearly $100 million from global supporters—proving blockchain’s power for fast, borderless humanitarian aid.
Initially, Ukraine teased an NFT-based airdrop for donors, sparking speculative interest. However, they later canceled the plan and pivoted to selling NFTs instead. That effort raised only $1.2 million, underscoring the gap between hype and real demand.
Still, the success of direct crypto donations highlighted a legitimate, impactful use case beyond speculation.
Yuga Labs’ Monumental Year
While many projects crumbled, Yuga Labs thrived.
In March, holders of Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and related NFTs received an airdrop of ApeCoin (APE)—worth up to $140,000 per BAYC at launch.
Some traders exploited the system: one group borrowed BAYCs via a fractional NFT vault, claimed APE rewards, returned the NFTs—and pocketed $1.1 million in one day.
Later, Yuga Labs sold 55,000 virtual land plots in its Otherside metaverse for 317,000 ETH (~$317 million at the time)—setting an NFT minting record. Though talk of launching their own blockchain faded, Yuga remained a dominant force in Web3 culture.
Ronin Network Hack: $540 Million Lost
Axie Infinity’s sidechain, Ronin Network, suffered the largest crypto heist of 2022.
After a social engineering attack compromised a Sky Mavis developer via a malicious PDF job offer, hackers gained control of four validator nodes. They later took over a fifth through the Axie DAO validator, achieving majority control.
They stole $540 million in ETH and USDC—later linked to North Korea’s Lazarus Group.
Sky Mavis responded by increasing validators from nine to seventeen and rolling out insurance plans. Recovery has been slow, but partial reimbursements began in 2023.
Celsius Halts Withdrawals and Files for Bankruptcy
Following Luna’s collapse, crypto lender Celsius Network froze withdrawals in June 2022.
By July, it filed for Chapter 11 bankruptcy with a $1.2 billion hole in its balance sheet. Investigations revealed risky bets on experimental DeFi protocols like BadgerDAO and overexposure to illiquid assets.
Even its own CEL token—listed as a $600 million asset—became nearly worthless. Customers are still waiting for partial returns through court-supervised restructuring.
Genesis and DCG Crisis
Digital Currency Group (DCG), parent of Grayscale and Genesis, faced existential threats.
Genesis had lent $2.3 billion to 3AC**, leaving it exposed when the fund collapsed. DCG absorbed the loss via promissory notes. Then came FTX’s implosion—Genesis lost **$175 million held on the exchange.
Meanwhile, Grayscale’s flagship product, GBTC, traded at a 50% discount to net asset value due to redemption restrictions and market pessimism. DCG’s attempts to buy back shares failed to restore confidence.
The crisis threatened DCG’s solvency and raised questions about interconnected risks in centralized crypto finance.
Ethereum Completes The Merge
Amid the chaos, a technological triumph stood out: The Merge.
In September 2022, Ethereum successfully transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Miners were replaced by validators who stake ETH to secure the network.
The upgrade cut Ethereum’s energy consumption by over 99%, addressing environmental concerns about blockchain scalability.
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Ethereum’s tokenomics also shifted dramatically:
- Lower issuance rates reduced inflation.
- With EIP-1559 burning base fees, periods of high usage lead to net deflation.
- For the first time, ETH supply began contracting under certain conditions.
The Merge laid the foundation for future scalability upgrades like sharding and rollups.
Final Reflections: Lessons from a Tumultuous Year
2022 was brutal—but instructive. It exposed the dangers of leverage, poor governance, and blind trust in opaque institutions. At the same time, it showcased crypto’s potential: empowering nations in crisis, enabling community rewards through NFTs, and advancing sustainable blockchain design.
As regulation tightens and transparency demands grow, the industry must evolve—or face further reckoning.
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Frequently Asked Questions (FAQ)
Q: What caused the collapse of Terra (LUNA)?
A: A loss of confidence in its algorithmic stablecoin UST triggered a death spiral where massive amounts of LUNA were minted to stabilize UST, crashing both tokens’ values.
Q: How did FTX misuse customer funds?
A: FTX lent customer deposits to Alameda Research without disclosure or risk controls, leading to insolvency when markets turned.
Q: Did Ukraine actually distribute an NFT airdrop to donors?
A: No. While initially suggested, Ukraine canceled the plan and instead launched an unsuccessful NFT sale campaign.
Q: What is The Merge in Ethereum?
A: The Merge refers to Ethereum’s transition from energy-intensive mining (PoW) to energy-efficient staking (PoS), reducing environmental impact and changing ETH economics.
Q: Who hacked the Ronin Network?
A: The Lazarus Group, a hacker collective linked to North Korea, exploited compromised credentials to steal $540 million from Axie Infinity’s sidechain.
Q: Is investing in crypto safer now than in 2022?
A: While risks remain, increased scrutiny, regulatory action, and lessons learned have led to stronger risk management practices across reputable platforms today.
Keywords: Ethereum The Merge, FTX collapse, Luna crash, crypto history 2022, algorithmic stablecoin failure, NFT airdrop, Ronin hack