The entire crypto industry in 2023 has experienced ups and downs. The Silicon Valley Bank crisis at the beginning of the year caused the market, which had just suffered from FTX's heavy positions, to continue to fluctuate. Subsequently, various regulatory storms began to usher in, and industry giants were in danger. However, "danger" and "opportunity" always go hand in hand. With the approaching Bitcoin halving, the expectation of the passage of the Bitcoin spot ETF, coupled with the rise of the BRC20 narrative, has triggered a wave of inscriptions on various public chains. The superposition of various narratives has brought about a surge in market enthusiasm at the end of the year. Bitcoin once exceeded US$45,000, with an annual increase of more than 150%, and the market has entered the early stage of the bull market. So who are the influential figures in these twists and turns? The direction of the entire market in 2024 depends on them?
01 Retire at the height of his career - CZ On November 23, 2023, CZ announced his resignation as CEO of BN, saying that he would not hold an executive position, but would retain a majority stake in Binance. He also said that he would step back and become an investor. The news shocked the entire industry.
Why did CZ suddenly resign? The reason is that on November 22, 2023, BN and its CEO Zhao Changpeng (CZ) pleaded guilty to U.S. federal charges. BN was charged with three counts, including anti-money laundering, operating an unlicensed remittance business, and violating U.S. sanctions. In order to develop BN in the future, it reached a settlement with the SEC at the cost of a huge fine of $4.368 billion, allowing it to continue operating, and CZ resigned. In fact, this lawsuit has been dragging on for 5 years. As early as 2018, the U.S. Department of Justice began to investigate BN's suspected crimes of unlicensed remittance, money laundering and violating U.S. sanctions, but it was finally settled this year. However, looking back at BN's growth from a small transparent startup in 2017 to today's industry leader, CZ has made an indelible contribution in the past 6 years. It can be said that he has built a diversified business system for the industry from scratch, including spot, futures, options, mining pools, cloud services, public chains and other fields. At the same time, it has also developed the original single CEX into a comprehensive Web3 group and spread its products, services and brand influence to the world.
In the past 6 years, under the leadership of CZ, BN has achieved a leading position in the fields of trading platforms, public chains, wallets, and investments. However, as BN has become an industry giant, CZ may have realized that as an industry leader, the biggest challenge at this time may no longer be competition, but to take the responsibility of leading the crypto industry towards compliance. Therefore, after CZ stepped down, some people said that he was "burning his own self for light, illuminating the road of compliance innovation for those who come after him", and even paved the way for the "ETF in progress".
02 A blow from the SEC Chairman
Since becoming the chairman of the SEC, Gary Gensler has launched a rigorous crackdown on crypto regulation, which has also put him in the spotlight in the crypto space, especially in 2023. Most notably, he led the SEC's lawsuit against Ripple and imposed millions of dollars in fines on crypto trading platforms such as Kraken. This has triggered a wave of fear, uncertainty, and doubt (FUD) throughout the crypto industry, and has also caused concerns among other top platforms.
Speaking of his crackdown on cryptocurrencies, what made him famous was the SEC lawsuit against digital payment protocol Ripple, which he led in December 2020. In the name of protecting consumers, the case severely cracked down on the pledge services of crypto platforms and attempted to turn all tokens into securities. The recent victory in the lawsuit against CZ and BN is another regulatory milestone for the SEC under Gensler's leadership. In addition to these two crypto lawsuits, according to incomplete statistics, the crypto cases designed by the SEC include:
1) Bittrex and its former CEO were accused of operating an unregistered exchange, broker, and clearing agency. 2) Two people involved in the Ormeus Coin fraud were fined more than $23 million. 3) Tron founder Justin Sun and his company were accused of illegally selling unregistered securities, fraud, and market manipulation. 4) Terraform Labs and Do Kwon were accused of planning a multi-billion-dollar crypto asset securities fraud. 5) Trade Coin Club was accused of being involved in a $295 million crypto Ponzi scheme. 6) The SEC filed a lawsuit against Dragonchain, alleging unregistered crypto asset securities issuance. 7) The SEC charged 11 people who allegedly created and promoted Forsage with a $300 million fraudulent Ponzi scheme. 8) The U.S. Second Circuit Court ordered Terraform Labs and Do Kwon to comply with the SEC subpoena. 9) The SEC urgently stopped the distribution of Tokens of Telegram's cryptocurrency project TON, saying it was suspected of offering unregistered securities. 10) The SEC filed charges against Block.one and reached a settlement by paying a $24 million civil penalty involving the issuance of the unregistered digital token EOS.
In short, it can be said that as the crypto world grows and develops, the regulatory hammer of the SEC under Gensler's leadership follows closely.
03 Bear Market Pillar - Vitalik Buterin
Since its creation in 2014, Ethereum has entered its tenth year. Under the leadership of Vitalik, Ethereum has made a breakthrough contribution to the development of encryption. From the initial platform that could only support digital assets, it has developed to a platform that can support various decentralized applications and is known as the "world computer". If Satoshi Nakamoto is the creator of blockchain, then Vitalik Buterin is another key leader of blockchain encryption. Vitalik determined the earliest Ethereum roadmap: PoW to PoS (Phase 0) → Data Sharding (Phase 1) → Execution Sharding (Phase 2). Subsequently, during the development process, continuous corrections and debugging were made, expanding to the Ethereum roadmap centered on Rollup: The Merge, The Surge, The Scourge, The Verge, The Purge and The Splurge. Even though the overall development of Ethereum in 2023 is relatively flat, the most important thing is the Shanghai upgrade completed in April, and the rise of the staking track after the upgrade.
In the unsatisfactory market conditions in 2022, only Ethereum layer2 experienced an explosive growth phase at the end of the year, becoming the main focus extending to the first half of 2023, especially the leading development of Arbitrum. According to L2beat data, the total value locked (TVL) of Layer2 has now reached US$20.1 billion (as shown in the figure below), leaving room for development for builders in this phase of the bear market.
Vitalik is more optimistic about Rollup, so he combines it with privacy protection and zero-knowledge proofs (ZK) technology. Although OP-Rollup is still the mainstream of the Layer2 ecosystem, with the advancement of zero-knowledge proof technology, ZK Rollup is likely to become the final Layer2 solution. In addition, we have to mention Ethereum's next upgrade, the Cancun upgrade. It has been revealed that if there are no unexpected circumstances, the test will be officially launched on January 17, 2024. If successful, this will greatly increase the Ethereum network's transaction volume per second, and will also open a new stage of development in Ethereum's data storage and retrieval capabilities, further paving the way for the development of Ethereum's Layer2.
04 The founder of the inscription craze——Founder of Ordinals
The recent carnival in the inscription market has exceeded many people's expectations, and the founder of this event can be traced back to Casey Rodarmor, the founder of Ordinals.
Rodarmor has been working in technology since 2010, working at Google, Chaincode Labs, and has also worked on the main code implementation of the Bitcoin Core Protocol. Last year, he also served as the co-host of Bitcoin BitDevs in San Francisco. Bitcoin BitDevs started in New York City and is a community that holds monthly gatherings to discuss some of the more technical aspects of Bitcoin. Bitcoin BitDevs is an important part of Bitcoin's grassroots culture. Earlier this year, the Ordinal protocol developed by Rodarmor enabled Ordinal NFTs and inscriptions to be implemented on Bitcoin. This is another attempt at NFT on Bitcoin since the colored coins that appeared in 2012 and the derivative Counterparty in 2014. The Ordinal protocol outlines a method for sequentially numbering Satoshi (the smallest unit of Bitcoin, sat, representing one hundred millionth of a Bitcoin). Once the serial number of Sat is obtained, users can burn data onto these Sats to create digital artifacts, which is Rodarmor's initial description relative to NFT. As of December 27, 2023, the cumulative fees for Ordinals inscription minting reached 5028 BTC.
Rodarmor said that Ordinals was inspired by Satoshi Nakamoto, the pseudonymous founder of Bitcoin. Satoshi Nakamoto mentioned something called "atoms" in the original Bitcoin codebase. Rodarmor is currently working on Ordinals full-time. In September of this year, Rodarmor proposed a new Bitcoin FT protocol design concept called "Rune", also known as the "Rune" protocol, but it has not yet been launched. However, regardless of the subsequent development of Runes, the Ordinals proposed by Rodarmor inspired the development of BRC20 Token. In addition to starting the inscription craze, it also triggered the further development of the Bitcoin ecosystem.
05 The financial giant waiting to be opened——CEO of BlackRock
BlackRock applied for a spot Bitcoin ETF on June 15, 2023, and the news caused a sensation in the crypto industry. The SEC has rejected dozens of applications for similar funds in the past decade, but why did BlackRock's application cause such a sensation in the industry? On the one hand, the SEC has previously rejected applications for spot Bitcoin ETFs on the grounds of concerns about fraud and market manipulation and wanting to protect investors, including the previous FTX collapse, which has led to further tightening of regulation on cryptocurrency companies this year. As the world's largest asset management company, BlackRock manages assets about 10 times the market value of the entire cryptocurrency industry. If the ETF application is successfully passed, its large amount of funds will have a significant impact on the cryptocurrency industry and drive up the price of crypto assets. If the application is successful, it may trigger the next round of bull market.
On the other hand, BlackRock's move encouraged eight financial companies, including Fidelity, Invesco, VanEck, Cathie Wood's Ark Investment Management, and WisdomTree, to follow suit. These companies have submitted corresponding applications, which has greatly promoted the development of Bitcoin ETFs. BlackRock CEO Larry Fink has a long story to tell about his relationship with Bitcoin. As early as 2017, Fink said he was a "loyal believer" in cryptocurrencies, but was concerned about market speculation at the time. On July 16, 2018, he said that BlackRock's clients were not interested in cryptocurrencies and slowed BlackRock's investment in the field. In 2019, as the market improved, BlackRock hired Robbie Mitchnick, former marketing director of Ripple, and began to explore the feasibility of cryptocurrencies. In 2020, he began to change his attitude towards cryptocurrencies, believing that cryptocurrencies will be necessary and may replace gold. In 2021, Fink said he was studying Bitcoin again, but no definitive conclusion has been made. In 2023, BlackRock submitted an application for a Bitcoin ETF, and Fink said that cryptocurrencies are expected to surpass global currencies.
06 Life imprisonment——SBF
In November 2023, on the first anniversary of FTX's collapse, its founder SBF was convicted of seven counts, including fraud and money laundering. The prosecutor called it "one of the largest financial frauds in American history". What happened? SBF, formerly known as Sam Bankman-Fried, is the co-founder and former CEO of the bankrupt CEX FTX and the crypto company Alameda Research. FTX rose in the bull market in 2020 and became the world's third largest CEX, attracting more than one million users and many well-known investment institutions. The peak valuation was US$32 billion. In November 2022, CoinDesk disclosed a financial document that revealed the potential debt problems between FTX and Alameda Research. This information caused panic among users and led to a run on funds. In less than a few days, the FTX Group declared bankruptcy and SBF resigned. In 2021, at the age of 28, SBF was already on Forbes’ 30 Under 30 list, but in just two years, he now has a real-time net worth of $0.
After FTX went bankrupt, more than $370 million in assets were stolen, triggering an investigation by U.S. prosecutors. To deal with the chaos, FTX asked former regulatory officials for help, but the company's collapse raised questions about regulation. In court documents, FTX revealed that more than $2 billion was transferred to SBF. FTX accused former executives such as SBF of embezzling $1 billion in company funds. The trial involved 20 witnesses, including the former CEO, SBF's ex-girlfriend and other executives. The trial of this case began in early October 2023 and lasted for a month. The sentencing date is scheduled for March 28, 2024. If SBF is convicted of the maximum penalty for all charges by then, he will face 115 years in prison. However, according to relevant news on December 30, 2023, the U.S. government withdrew six charges against SBF, including violations of campaign finance regulations and conspiracy to commit bribery, which means that SBF will not need to face a second trial.
07 Meme Master——Musk
Musk's most famous relationship with crypto is his story with Dogecoin, but Musk's relationship with crypto has a long history. As early as 2021, Musk's companies Tesla and SpaceX both purchased large amounts of Bitcoin.
Due to its acquisition of Twitter in October 2022, on April 5 this year, Musk changed the Twitter logo to a dog head, a move that caused the price of Dogecoin to rise by more than 20% in an instant. For reference, Musk changed the Twitter logo to a Dogecoin emoji. What is his intention? Then on July 30, Twitter changed its classic blue bird logo to "X", but this move was hailed as a major impact on cryptocurrency. Because in 1999, Musk co-founded X.com, an online financial services and email payment company, which is now PayPal, becoming one of the earliest and most successful online payment processing companies in the world. Now Musk is reshaping Twitter into a broader new service called X, which is likely intended to turn this iconic social media app into a payment platform. Some people speculate that he will integrate other crypto assets such as Bitcoin, Ethereum, and stablecoins such as USDC, especially the billionaire's favorite Dogecoin. Therefore, it is also very likely that Musk will continue to bring big changes to the crypto industry.
08 Moving forward under pressure——Coinbase CEO
With CZ leaving BN and SBF in jail, Brian Armstrong is the biggest figure still in trouble. Brian Armstrong is the co-founder and CEO of Coinbase, and he also has considerable influence on the crypto industry.
First of all, Coinbase launched its own Layer2 blockchain Base and derivatives exchange Blade this year, and is expected to launch a Bitcoin ETF in 2024. This is undoubtedly actively preparing for the next wave of the crypto market. At the same time, like BN, Coinbase also faces regulatory challenges and has been accused of illegal trading. Previously, the SEC regarded all tokens as securities, which had an impact on the entire cryptocurrency industry. And Armstrong also moved forward, likening Coinbase to a local sheriff and calling for action to address regulatory issues led by US institutions. Armstrong once posted on the social media platform X: "We can't always grow as fast as other companies. The nature of the industry makes compliance operations more difficult and more expensive. The news (about BN) further proves that choosing to do the hard things is the right decision." In fact, as early as January this year, Coinbase acquired FairX, a derivatives exchange regulated by the US Commodity Futures Trading Commission (CFTC). This acquisition is a key step for Coinbase to provide crypto derivatives to US retail and institutional customers. He also founded the "Stand With Crypto" organization, hoping to protect the industry from government criticism.
From a macro perspective, as BN has been suppressed by regulators and another competitor, Kraken, has been accused of similar crimes, it is a positive factor for the development of Coinbase as an individual, causing the price of Coinbase to rise by 200% this year, with a market value of more than $25 billion. However, the development of Coinbase has not been smooth sailing since then. What it will face next is the poor development of the overall crypto market. Although some settlement agreements have resolved some major problems in crypto this year, a bigger catalyst is still needed to boost the overall market. At present, the next important catalyst is the possibility of regulators approving a Bitcoin ETF. As mentioned above, BlackRock announced that it has applied to launch a Bitcoin ETF, which happens to be managed by Coinbase. The hope of ETF approval has driven the rise of Bitcoin and Coinbase. How it will develop in the future is worth paying attention to.
09 AI OpenAI—CEO of OpenAI
Since ChatGPT was released on November 30, 2022, it has quickly become one of the fastest-growing consumer apps in history, with 100 million monthly active users just two months after its release. Sam Altman, CEO of its production company OpenAI, has also attracted much attention. However, in addition to the popularity of ChatGPT at the beginning of the year, last month, the board of directors removed Altman due to a letter sent by several researchers to the board of directors stating that OpenAI has made a major AI discovery and may threaten humanity. On November 18, 2023, OpenAI announced through its official website that the current CEO, Sam Altman, known as the "father of ChatGPT", will resign as CEO and leave the board of directors. As soon as the news came out, a large number of employees announced that they would move forward and retreat with him and also chose to resign. The news came suddenly, and then he announced the shocking news that he would join Microsoft with his assistant. However, in another reversal, five days after being fired, Sam Altman once again became the CEO of OpenAI.
Altman said at X that his decisions over the past few days, including choosing to join Microsoft, were all about preserving the OpenAI team and mission. Now that OpenAI has a new board of directors and has the support of Microsoft CEO Satya Nadella, Altman looks forward to returning to OpenAI and maintaining an excellent partnership with Microsoft.
In July this year, Altman created and launched the Worldcoin project and Token, which aims to solve the global online identity authentication and income inequality problems. Since most people in the world cannot verify their identities digitally, Worldcoin hopes to build the world's largest and fair digital identity and currency system to help everyone enter the global financial system, but the project is currently facing some regulatory resistance. As one of the areas worth paying attention to in the crypto field in 2024, Sam Altman has to mention AI.
10 Pie is finally profitable——El Salvador President
It is reported that as of December 4, 2023, Salvadoran President Nayib Bukele said that according to the current market price of Bitcoin, if it is sold, not only can 100% of the investment be recovered, but also a profit of more than 3.6 million US dollars can be obtained. All this is inseparable from the promotion of Salvadoran President Nayib Bukele.
As a small country in Central America, El Salvador does not have its own legal currency and chooses to use the US dollar. This has had some impact on the economy. People working outside need to pay expensive remittance fees, which is not conducive to increasing GDP. In addition, about 70% of people in El Salvador do not have bank accounts or credit cards. In addition, the unstable economy and constant unrest are not a good situation for the government. In order to repair the economy to a certain extent, El Salvador needs to attract new investors. In addition to external factors, Bukele is also a true Bitcoin enthusiast. Therefore, under the promotion of Bukele, on June 9, 2021, El Salvador voted in favor of the formal passage of the bill by an "absolute majority" to make Bitcoin a legal tender in the country. El Salvador became the first country to declare Bitcoin as a legal tender. This decision has attracted widespread attention around the world. Since the implementation of this policy, El Salvador has begun to actively promote digital payments and financial inclusion, hoping to provide residents with a wider range of financial services and convenience through the adoption of Bitcoin. In addition, it is reported that the country will purchase one Bitcoin every day since the policy was announced.
Additionally, the move is seen as an innovative attempt at a financial system that could influence other countries’ fiat monetary policy choices in the future. Over time, El Salvador’s relationship with Bitcoin will become an important case study in global digital currency experiments.
