In 2023, the cryptocurrency industry was recovering from the severe shocks of the previous year. Some companies and projects managed to bounce back after a prolonged downturn, while others faced a more grim outcome.
A gradual "thaw" set in: #bitcoin began to show resilience and eventually surged to $44,000, marking a 150% price increase since January.
The past year resolved several crucial issues, such as the fate of the founder of the collapsed FTX. However, it also created new challenges for the market and its participants.
Events
The end of the crypto winter
In November 2022, the first cryptocurrency tested a yearly low, dropping to around $17,000, and altcoins followed suit. Concurrently, the market capitalization dipped below the $1 trillion mark. This decline occurred against the backdrop of the FTX liquidity crisis and the announcement of its acquisition by Binance, a major competitor.However, Bitcoin did not linger at the local bottom for long—on January 9, its prices surpassed $17,000. By February, it had risen to $24,000. Talk of a "thaw" began in March when the Federal Reserve once again raised the key interest rate, but digital gold managed to hold steady at $28,000.From that point until mid-autumn, Bitcoin traded in the range of $25,000 to $30,000. On October 16, the coin's prices broke through the upper resistance level, particularly after a fake approval rumor regarding a spot #etf based on digital gold from BlackRock, leading to an active growth phase.
In comparison, Ethereum, the second-largest cryptocurrency, demonstrated less activity, gaining only 97% for the year, reaching $2,350.

By the end of the year, the total market capitalization reached $1.75 trillion.
However, over the past 12 months, several altcoins have outperformed even Bitcoin in terms of growth. Among them: SOL (+1000% since January), AVAX (+270%), and ADA (+150%). All three coins entered the top 10 by market capitalization.
The DeFi sector demonstrated modest growth. The total value locked (TVL) in decentralized protocols increased by 42% from January, rising from $38 billion to $54 billion.

After nearly two months of growth, the market faced a slight correction in mid-December. On December 11, Bitcoin slipped below the $42,000 level and entered a flat phase, consolidating within this range. Some analysts speculated on further declines in prices.
JPMorgan experts expressed confidence that the crypto winter has not yet concluded. According to their opinion, its end will signal the revival of venture funding direction.
Challenges for Binance
Likely, 2023 proved to be the most challenging year in terms of regulation for the largest cryptocurrency exchange by trading volume throughout its six years of existence.
Binance had faced regulatory issues with authorities from various countries before, but U.S. agencies decided to exert significant pressure on the company and its former CEO, Changpeng Zhao (CZ).
On March 27, the CFTC accused the platform of violating derivative trading rules and operating without a license. According to the regulator, Binance was aware that its clients included sanctioned individuals.On June 5, the #sec filed a lawsuit against the exchange and Zhao, bringing forth 13 charges, including the sale of unregistered securities. Later, the regulator filed a motion for the freezing of digital assets of the U.S. subsidiary.After about two weeks, the parties reached an agreement on customer funds in the U.S., and the exchange resumed withdrawals.Binance and #cz attempted several times to dismiss the CFTC and SEC lawsuits, but the most significant blow awaited them in late autumn. On November 21, reports emerged about the company's agreement with the U.S. Department of Justice, where the exchange committed to paying fines totaling $4.3 billion.
The deal involved charges against Zhao for money laundering, financial fraud, and sanctions violations. Zhao resigned as CEO, admitting guilt in part for non-compliance with anti-money laundering laws. He also agreed to pay $50 million. The new CEO of the exchange became Richard Teng.
The former head of #binance posted a $175 million bail to remain free until the verdict is announced on February 23, 2024. However, the court prohibited him from returning home to the UAE, citing a flight risk as pointed out by prosecutors.
Throughout the year, due to ongoing legal disputes, Binance's financial indicators consistently declined.
According to CCData, the market share of the exchange in December was only 30.1%, compared to 55% in January. By September, the platform's spot volumes had decreased by over 70%, from $474 billion to $114 billion.

Furthermore, Binance had to exit the Russian jurisdiction by selling its local business, CommEX. On November 15, the cryptocurrency exchange completely ceased accepting deposits in Russian rubles.
Sam Bankman-Fried behind bars
The year 2023 turned out to be perhaps even worse for Sam Bankman-Fried (SBF), the founder of FTX, than for Binance.
In December 2022, he was arrested in the Bahamas and extradited to the United States, where the Department of Justice charged him with eight criminal offenses. A few days later, SBF was released on a $250 million bail and placed under house arrest.Over the next six months, Bankman-Fried spent time with his parents with an ankle monitor, preparing for the upcoming trial scheduled for early October. During this period, the number of charges against him increased to 13, including various types of fraud, conspiracy to defraud, money laundering, bribery, and violations of U.S. campaign finance laws. Later, the prosecution dropped the charges related to politicians as part of a deal with the defense. However, the founder of FTX did not plead guilty to any of the charges.On August 8, two months before the trial, house arrest turned into imprisonment for SBF. The court revoked the previous bail at the request of prosecutors.
They argued that Bankman-Fried, while free, had contacted witnesses, used VPN ostensibly to watch the Super Bowl, and shared personal records of Alameda Research's former head, Caroline Ellison, with journalists.
On October 3, the trial began. The process, during which testimonies were given by Ellison, FTX co-founder Gary Wang, and the head of the exchange's engineering department, Nishad Singh, did not last long.Bankman-Fried also decided to testify before the jury against the advice of lawyers. However, he failed to convince the impartial panel. On November 2, SBF was found guilty on seven charges, including money laundering, fraud, and conspiracy. He faces a maximum sentence of 115 years in prison, and the sentencing is scheduled for March 28, 2024.

The founder of FTX was placed in the Brooklyn prison (New York). According to WSJ, he shared a cell with the former president of Honduras, Juan Hernandez, and provided advice to supervisors on cryptocurrency investments.
Blogger Tiffany Fong interviewed former mobster Gina Borrello, who was incarcerated with Bankman-Fried. He revealed that initially, Bankman-Fried was "out of his element" and was a target for attacks due to his timid nature and a physique resembling that of an "80-year-old man."
By December, FTX's Chief Legal Officer, David Mills, admitted that winning the legal battle was "practically impossible," considering the testimony of the founder's closest colleagues at the exchange.Regarding the company's situation, in October, the new management and creditors approved a compensation plan for customers. By mid-2024, FTX users could receive payouts totaling $9.2 billion in claims.Simultaneously, the exchange's leadership began considering restructuring options. Even SEC Chairman Gary Gensler supported the relaunch of the trading platform. In December, FTX introduced a revised customer refund plan, where assets would be valued at the exchange rate on the date of the bankruptcy filing—November 11, 2022. The proposal is expected to go through a voting stage.
Base launch
On February 23, the American Bitcoin exchange Coinbase launched the test network of its second-layer solution called Base, developed based on the OP Stack architecture from Optimism. The platform is positioned as a "secure, cost-effective, and developer-friendly way to create decentralized applications." It operates as an Ethereum rollup network.The mainnet was officially launched on August 9, introducing functionality for interacting with non-fungible tokens (NFTs).
According to CoinGecko, the fees on Base are 10 times lower than in the main Ethereum network.
Coinbase CEO Brian Armstrong and other developers of the L2 solution stated that the project has no plans to release a native token. However, the community still hopes for an unexpected airdrop.
Arrest of Do Kwon
Co-founder and CEO of Terraform Labs (TFL), Do Kwon, allegedly responsible for the collapse of the Terra ecosystem and the UST stablecoin, also fell into the hands of the authorities.
On March 23, he was arrested at the airport in the capital of Montenegro while attempting to fly to Dubai with forged documents. The detention occurred at the request of law enforcement agencies from Singapore, South Korea, and the United States, where he faces charges of fraud from the SEC and the Federal Prosecutor's Office in New York.In July, Kwon was released under house arrest, with a bail amount of €400,000 ($436,000). Prior to this, South Korea urged Montenegro to extradite the head of TFL to his homeland, but the United States also seeks extradition.
Later, the court found Kwon guilty of document forgery and sentenced him to four months in prison. He never admitted guilt, attributing all responsibility to an agency in Singapore, the name of which he could not recall.
Simultaneously, the Swiss government blocked around $26 million in Bitcoin and other cryptocurrencies linked to Terraform Labs and Kwon.
In November, the Podgorica court approved his extradition to both South Korea and the United States. The final decision on the priority destination will be made by the Minister of Justice of Montenegro.In December, Kwon was kept in prison until February 15, 2024, at the request of the countries seeking extradition, but later, the authorities revoked the extradition decision.
Significant victories
On June 13, Ripple achieved a partial victory in the case against the SEC, a legal battle that had been ongoing since 2020.
Judge Analisa Torres ruled that the programmatic sales and other distributions of XRP tokens do not constitute the sale of investment contracts. However, according to the decision, the distribution of the asset among institutional industry participants violated securities laws.
A noteworthy development was the court's disclosure of documents related to the 2018 speech by former SEC official William Hinman. In his earlier address, the former director of the agency's Division of Corporate Finance stated that, for certain reasons, Bitcoin and Ethereum are not considered securities. These materials not only affirmed Ripple's position but also provided an additional argument for the broader crypto market.
However, the SEC attempted to challenge the court's decision, but Torres rejected the appeal. She considered that the Commission did not provide sufficient evidence, and the arguments presented could not "materially advance the final resolution of the case."
Ultimately, the regulator dropped all charges against Ripple's co-founder Chris Larsen and CEO Brad Garlinghouse. The parties reached a peaceful settlement.
The outcome of the proceedings had a positive impact on the XRP price. Over the past 12 months, the token has grown by 65%, reaching $0.63.

Another setback for the SEC came in the verdict favoring Grayscale. In June 2022, the asset manager filed a lawsuit against the regulator for refusing to convert its flagship trust, GBTC, into a spot Bitcoin ETF.The corresponding application was submitted by the firm as early as October 2021. In August 2023, the court granted Grayscale's motion, compelling the Commission to reconsider its decision. Later, the appellate court formally approved the ruling.By the end of December, the GBTC discount to the net asset value had narrowed to 8.52% amid expectations of the launch of an ETF based on the leading cryptocurrency. At the beginning of the year, the indicator stood at 48.31%.

Trends
ETF Race
Efforts to launch a spot exchange-traded fund (ETF) based on the first cryptocurrency in the United States have been ongoing for quite some time. Until 2023, the SEC inexplicably refused to approve the instrument despite the existence of futures products.
Companies haven't forgotten about the second-largest cryptocurrency. In November, BlackRock submitted an application to the SEC for the registration of a spot Ethereum ETF. It was followed by Fidelity Investments.
Among other firms that filed requests:
VanEck (launched Ethereum Strategy ETF on CBOE in September)Valkyrie (SEC postponed the decision)21Shares and ARK Invest (SEC postponed the decision)Grayscale Investments (SEC postponed the decision)Invesco and Galaxy Digital (joint application under consideration)
Staking
In 2022, Ethereum activated the upgrade known as The Merge, transitioning the blockchain to the Proof-of-Stake consensus algorithm. Users gained access to staking, but they could withdraw their assets only after a hard fork.This moment arrived on April 13, 2023, with the launch of Shapella on the main network.
Initially, validator withdrawals exceeded deposit volumes, but the trend quickly reversed. By the end of April, the total value locked (TVL) in liquid staking protocols reached $17.8 billion, surpassing DEX figures for the first time.
Meanwhile, the Shapella upgrade had little impact on ETH prices, causing only an increase in interest in staking.

The LSD provider Lido Finance gained the most popularity. After the hard fork, its Total Value Locked (TVL) increased at a rapid pace. The release of the second version of the protocol in May introduced the option to withdraw Ethereum from staking by burning stETH.
Lido's share quickly reached 30% of the total locked ETH, causing concerns among market participants regarding the network's security.

Nevertheless, by mid-autumn, analysts recorded a decline in demand for Ethereum staking. According to Coinbase's report, in October, the validator queue emptied for the first time since the hard fork launch. Simultaneously, the yield from staking coins also decreased.In late November, Glassnode experts noted the first reduction in ETH staking and an increase in the number of exiting validators. This led to a decrease in the number of locked coins and slowed down emissions.
According to Dune's dashboard, by the end of the year, the assets staked amounted to 28.86 million ($68.11 billion), approximately 24% of the total emission.
Return of Meme Coins
In April 2023, the market was once again hit by a wave of meme cryptocurrencies. This time, it wasn't a dog but a frog that stirred up the community: in April, the PEPE token surged over 200% in a day, surpassing a market capitalization of $110 million.
One user managed to turn $260 into $2 million in a week of meme coin trading. There were also reports that an MEV bot made ~$1.5 million in profit in pairs with a meme token, spending $1.3 million on gas.
PEPE faced liquidity and withdrawal issues at launch. However, the coin quickly gained popularity—on May 5th, Binance announced the listing of PEPE and another meme cryptocurrency, FLOKI. In response, both tokens surged 40% and 60%, respectively, within an hour.
However, after being listed on the trading platform, the asset's quotes declined along with the frenzy around it. By the end of the summer, the PEPE price plummeted by 20% following reports of a potential scam.
Later, the project's developer accused former team members of stealing $15 million.
Despite the negative background, some traders still favored PEPE for its increased volatility and leverage potential. Its average daily trading volume exceeds $100 million.

Amid the popularity of the new "meme favorite," many other similar tokens began to emerge in large quantities. At a certain point, the cumulative unrealized profit of the top ten holders of the Milady (LADYS) coin reached $20 million.In July, the Base network was also flooded with a wave of meme tokens, some of which demonstrated a hundredfold growth. Traders started buying lesser-known coins like BALD, COIN, and BASED using the decentralized exchange LeetSwap.On July 30th, more than half of the daily trading volume on the platform was attributed to BALD operations—a coin referencing the bald CEO of Coinbase, Brian Armstrong. Within two days, the asset surged almost 40,000%.
However, in such a situation, there were cases of fraud, with some developers executing a liquidity pumping scheme and disappearing with investors' funds.
By the end of the year, the "old-timer" Dogecoin reminded everyone of its presence. In November, the community proposed sending a physical wallet with DOGE tokens to the Moon as part of the Peregrine Mission One mission by the space company Astrobotic. On its 10th anniversary, December 6th, the asset reached its yearly high, hitting $0.102, gaining almost 17% in 24 hours.
Bitcoin NFT
Despite the ongoing decline in the non-fungible token (NFT) market, the introduction of the Ordinals protocol and BRC-20 in the Bitcoin network in January breathed new life into media formats on the blockchain.
Users gained the ability to post images and other types of data in the ecosystem without using a separate token or sidechain, giving rise to Bitcoin NFTs.
In less than a month, the project gained immense popularity, with over 100,000 "inscriptions" released by mid-February. The protocol fork also migrated to Litecoin.However, discussions about the impact of Ordinals on the Bitcoin network began at that time. Opponents claimed that the protocol could overload the blockchain, which happened in September and November.
Nevertheless, many platforms added support for Bitcoin NFTs and BRC-20, including Binance and OKX. By the end of May, the number of created "inscriptions" exceeded 10 million.
The summer was not particularly productive for Ordinals. However, the technology's counterpart moved to Ethereum, and within the first week, the trading volume of "digital artifacts" surpassed $1 million.In July, the Bitcoin protocol team introduced a new BRC-69 format, which reduces the cost of issuing NFT collections.
Riding the wave of new autumn popularity, developers of other protocols were inspired to create their equivalents. Among them were Polygon, TON, Avalanche, and Fantom. The launch of solutions in these networks led to a surge in transactions and overload.
As of December 29th, the meme token ORDI, created on the Ordinals protocol, sharply rose to $77, adding 275% in monthly terms.

According to the Dune dashboard, in recent months, the average daily creation of "inscriptions" exceeds 100,000. By the end of the year, a total of over 52 million Bitcoin NFTs have been issued, with approximately $221 million spent on commissions.

However, not everything is smooth for Ordinals. Luke Dash Jr., a developer of Bitcoin Core, criticized the project for network congestion and called for the censorship of transactions in the BRC-20 format.
Later, based on his statement, the U.S. National Vulnerability Database marked the "inscriptions" created in the protocol as a cybersecurity threat to the blockchain of the first cryptocurrency.
Conclusion
Over the past year of 2023, the industry gradually recovered from the crypto winter and began to show positive dynamics again. New directions, projects, and developments emerged.
We hope for a calm and stable 2024, but it can be stated with certainty that the digital asset sector has already proven itself and is unlikely to disappear even in the event of unfavorable developments.
Source: ForkLog

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