The cryptocurrency market faced an unprecedented crisis in 2022, exposing deep-rooted flaws in the industry’s structure. A series of collapses wiped out billions, triggered regulatory crackdowns, and shattered investor trust. What began as isolated incidents snowballed into a full-blown crisis, with liquidity shortages, misleading claims, and reckless financial practices coming to light.
From lending platforms mismanaging funds to major exchanges imploding overnight, here’s a look at the five biggest crypto crashes of 2022 that reshaped the industry.
5. Voyager Digital’s False Promises Lead to Bankruptcy
Voyager Digital, a crypto brokerage and lending firm, crumbled under financial strain in July after one of its clients defaulted on a staggering $650 million loan. While this alone was a significant blow, further scrutiny revealed misleading claims about deposit insurance.
The Federal Deposit Insurance Corporation (FDIC) launched an investigation into Voyager for falsely suggesting that customer deposits were insured up to $250,000—an assurance that turned out to be untrue.
In a desperate attempt to salvage its business, Voyager Digital’s assets were sold to FTX for $1.42 billion. However, after FTX’s own collapse, Voyager was forced to reopen bidding. Binance.US later stepped in to acquire the firm for $1.02 billion, marking another chapter in the volatile crypto saga.
4. Celsius Network’s Deception and Collapse
Celsius Network, a major crypto lending platform, froze customer withdrawals in June, citing “extreme market conditions.” Just a month later, the company filed for Chapter 11 bankruptcy, leaving investors in limbo.
Investigations revealed that Celsius had long been in financial distress but concealed massive losses from investors. The firm also manipulated the value of its native token, CEL, to artificially inflate its balance sheet. More alarmingly, creditor meeting notes indicated that Celsius was operating like a Ponzi scheme—using new investor funds to pay out interest yields rather than generating sufficient revenue.
The scandal shattered confidence in crypto lending, reinforcing concerns over the industry’s lack of transparency.
3. BlockFi’s Free Fall from a $3 Billion Valuation
BlockFi, once one of the most promising crypto lending firms, saw its fortunes crumble in 2022. Regulatory troubles and exposure to failing entities led to its rapid downfall.
Earlier in the year, BlockFi was slapped with a $100 million fine for failing to register its crypto interest account. But the real damage came from its ties to Three Arrows Capital, a hedge fund that collapsed after defaulting on several loans. As losses mounted, BlockFi turned to FTX for a $250 million bailout.
However, when FTX itself went bankrupt, BlockFi lost its financial lifeline. Unable to recover, it halted withdrawals and filed for bankruptcy—marking yet another high-profile failure in the crypto lending space.
2. Tether Faces a Moment of Crisis
Stablecoins were meant to be the backbone of crypto stability, but in May, the world’s largest stablecoin, Tether (USDT), briefly lost its peg to the US dollar.
The crisis began with the collapse of TerraUSD (UST), an algorithmic stablecoin whose value plummeted after a mass exodus of investors. The panic spread, and Tether holders rushed to redeem nearly $3 billion, fearing that USDT could suffer the same fate.
For a short period, Tether traded at around $0.95 instead of its usual $1. Unlike TerraUSD, however, Tether had enough cash reserves to weather the storm and eventually regained its peg. Nonetheless, the event highlighted the vulnerability of stablecoins and intensified calls for stricter regulations.
1. FTX’s Shocking Implosion
FTX, once hailed as the savior of struggling crypto firms, became the industry’s biggest failure of the year.
The collapse began when Binance, a rival exchange, sold off all its holdings of FTX’s native token, FTT. This move triggered panic among investors, leading to mass withdrawals and exposing FTX’s liquidity crisis.
As the company struggled to stay afloat, investigations revealed a web of mismanagement and fraud. FTX had allegedly funneled customer funds into its sister company, Alameda Research, to cover risky bets—violating financial regulations. With no way to recover, FTX filed for bankruptcy, wiping out billions in investor funds.
Founder Sam Bankman-Fried, once a celebrated figure in the industry, now faces legal scrutiny, with the Securities and Exchange Commission (SEC) and the Department of Justice launching probes into the company’s activities.
A Long Road to Recovery
The events of 2022 exposed the fragility of the crypto industry, where high-risk ventures, misleading claims, and reckless financial management led to catastrophic failures. The collapse of major players like FTX, Celsius, and BlockFi shattered investor confidence, while the instability of stablecoins like Tether raised questions about the long-term viability of digital assets.
As the market attempts to recover, regulators worldwide are tightening their grip, demanding greater transparency and accountability. Whether crypto can rebuild trust and establish a more sustainable future remains to be seen.