What the hack is going on: A look at 2022 downers

The cryptocurrency industry has always been susceptible to price swings and dramatic events. The slump of 2022 was no exception, with billions of dollars worth of holdings lost overnight due to the collapse of several notable exchanges and a series of DeFi hacks. As Winston Churchill said, “Never waste a good crisis.” So, let’s look back to understand the fault lines and how to emerge stronger from the crisis.

Terra Luna: In May 2022, the algorithmic stablecoin TerraUSD ($UST) and the sister coin that backed it, called Terra ($LUNA), collapsed, resulting in $40 billion in investor losses. The event had domino effects throughout the crypto industry.

The quick demise of LUNA shook individual investors and companies with business models that relied on this project to deliver on its promise.

LUNA was worth $116 in April. Since May, the price has dropped to a small fraction of a penny.

Voyager: founded in 2017 and operated similarly to a bank. According to the company’s website, users could deposit crypto and earn up to 17% interest. Celsius would also offer loans against those deposits. In June 2022, the company halted withdrawals, and subsequently, in July, Celcius filed for bankruptcy.

Three arrows Capital: At its peak, a crypto hedge fund had roughly $10 billion in assets until falling crypto prices prompted the company to default on billions of dollars in loans.

Temperature network: A bitcoin brokerage business filed bankruptcy in July. Before this filing, it had suspended consumer withdrawals. Three Arrows Capital’s inability to fulfill a $350 million debt payment was revealed.

FTX and FTX US: Both major cryptocurrency exchanges filed for bankruptcy on November 11, 2022. The move occurred due to the sale of FTX’s native token, FTT, and a large number of withdrawals. An alleged hack on the exchanges occurred shortly after they filed for bankruptcy, stealing hundreds of millions of dollars from user wallets.

BlockFi: In the aftermath of the FTX crisis, a cryptocurrency exchange froze customer withdrawals and discontinued normal business activities. It formerly had a credit line with FTX.US and was anticipated to be purchased by the company. On November 28, it filed for bankruptcy.

As if the crypto crisis was not enough. The industry was also riddled with hacks. According to blockchain think tank Chainalysis, 2022 may surpass 2021 as the worst year for crypto hacks. As mentioned in a Twitter post, the form mentioned that hackers had grossed over $3 billion across 125 hacks.

https://twitter.com/chainalysis/status/1580312149557026817?s=20

Some of the hacks have been summarized below:

What lies ahead?

While the specific circumstances that led to the slump are still being investigated, some lessons can be learned from the event.

First and foremost, the cryptocurrency industry is still relatively young and lacks the regulatory framework of more traditional financial markets. This lack of regulation makes it easier for dishonest actors to take advantage of investors and can lead to market manipulation.

Secondly, the cryptocurrency industry is highly volatile and prone to sudden changes in sentiment. This volatility makes it risky for investors to put their money into cryptocurrency assets and should be considered when making investment decisions.

Finally, cryptocurrency exchanges and wallets are prime targets for hackers due to the large amount of money that they hold. Investors should exercise caution when choosing where to store their assets and use reputable platforms with solid security measures.

NeoFi : a secure crypto exchange

NeoFi is a secure crypto investment with world-class security (multi-sig wallets, 2FA, layered checks), 24/7 support, and insurance of your funds. NeoFi has over 100,000 customers and is a simple investment platform. With NeoFi, you can invest easily with peace of mind.

NeoFi is the simplest and easiest way to get started in cryptocurrencies. NeoFi is designed to be simple and easy to use so that you can instantly purchase cryptocurrencies without going through multiple hurdles. We offer daily signals on when to buy and sell your assets from our in-house analyst and free withdrawals so that you can easily invest using INR and build a diversified cryptocurrency portfolio.

About NeoFi

NeoFI is a crypto-investment solution designed to automatically help every scale investor diversify their investment portfolio and risks. NeoFi relies on NeoFi baskets to help investors invest in their preferred niche with a single click.

NeoFI is working to onboard the next billion users to the cryptocurrency space. The project believes that its efforts will revolutionize the world of cryptocurrencies and level the playing field by offering more tools to retail investors. Learn more about the project at https://neofi.app/.

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