2022 in Review: the Top 10 Crypto Villains of the Year

SBF, Kwon, 3AC, and extra: 2022 was a packed yr for crypto villains. 

The Crypto Villains of the Yr 

The Crypto Briefing editorial crew places quite a lot of thought into our end-of-year lists. There are sometimes disagreements on who ought to function and we find yourself spending quite a lot of time going forwards and backwards on concepts till the record will get finalized. This yr’s prime 10 crypto villains record was the toughest one we’ve ever put collectively. 

After a yr just like the one we’ve simply had, it was an nearly unimaginable job to pick simply 10 villains. There are apparent candidates like Sam Bankman-Fried and his buddies who helped him commit the most important fraud of the century at FTX and Alameda Analysis. Whereas mainstream media retailers have hardly lobbed softballs on the entrepreneur now often known as “Rip-off Bankrun-Fraud,” we felt it was necessary to name out him and everybody else who was concerned within the scandal, which is why they collectively take the highest spot for 2022. 

In one other replace that ought to shock nobody, Su Zhu is again alongside Kyle Davies following Three Arrows Capital’s implosion, and Do Kwon, arguably the individual chargeable for essentially the most injury in crypto this yr, additionally options.

The most important twist to this yr’s record is the heavy skew towards former “heroes” within the area. There was a time when guys like SBF and Kwon have been idolized, which raises questions on how the crypto neighborhood ought to determine the following villains after they arrive (as a result of extra will arrive). 

Past the apparent names, we settled on just a few evil varieties who appeared to get away with making financial institution on the neighborhood’s expense, policymakers who went heavy on anti-crypto rhetoric, and a few good old school scammers. 

As ever, there have been loads of hackers and rug pullers that went unmentioned, however that doesn’t negate the damage they prompted for their very own monetary acquire this yr. We additionally excluded teams and establishments, which meant omitting the likes of Lazarus Group (for the $550 million Ronin Community assault and different cyber thefts) and the U.S. Treasury Division (for utilizing Lazarus Group’s actions as an excuse to sanction Twister Money). 

All in all, it’s the most important record of con artists we’ve ever put collectively, and we hope that a minimum of a number of the candidates are served their simply deserts by the top of 2023. Behold, and take thorough notes on the pink flags to look out for on the following market cycle. 

Sam Bankman-Fried and Mates 

The issue with overlaying the FTX scandal right here is that there are nonetheless so many unknowns, and we don’t know what to consider—particularly when Sam Bankman-Fried’s personal feedback have amounted to cryptic tweets and leaked apology notes that examine as coherently as you’d count on from somebody who was allegedly caning stimulants on the common. 

However placing apart the studies of amphetamine abuse, orgies, luxurious property acquisitions, and suspicious donations to political figures, there’s one cause above all else that Bankman-Fried is crypto’s Public Enemy Quantity One: he stole $10 billion of FTX prospects’ cash. 

Whereas FTX has solely lately declared chapter and authorized proceedings are ongoing, we do know that Bankman-Fried secretly siphoned buyer funds from FTX to his buying and selling agency Alameda Analysis because the agency confronted insolvency after Terra’s blowup. Twitter messages Bankman-Fried exchanged with a Vox journalist additionally reveal that Alameda might have been taking part in with FTX cash lengthy earlier than Terra imploded, and simply as shockingly, his persona of advantage was a deliberate facade to get anybody he wished—politicians, media publications, sports activities personalities, supermodels—onside. 

Bankman-Fried made out that he was on this area “to make a world affect for good” (on San Francisco billboards adorning his face and scruffy, unkempt hair, no much less), however the entire current revelations have solid doubt on that declare. Whereas we are able to’t conclusively say whether or not Bankman-Fried had good intentions or was evil from the outset, we don’t assume it’s a stretch to say that he’s at all times had an enormous ego, and that led to his astonishing fall from grace. 

Both method, it’s the sheer deception that makes Bankman-Fried our primary villain of the yr. This was a man who sat in entrance of Congress warning in opposition to the dangers of opaque crypto practices realizing that he’d stolen from his prospects with the identical practices. Nearly everybody purchased into his con, which has added damage on prime of the staggering monetary losses the neighborhood has suffered from FTX’s insolvency. 

It’s necessary to notice that Bankman-Fried, a gifted son of two Stanford Legislation College professors, grew up privileged earlier than he turned to crypto and efficient altruism. This may clarify why, in opposition to all odds, he’s nonetheless strolling free in The Bahamas, and mainstream retailers like The New York Occasions and The Wall Road Journal have handed him clear passes of their current protection. 

After we discuss Bankman-Fried, we even have to say the likes of Caroline Ellison, Sam Trabucco, Gary Wang, Constance Wang, and Nishad Singh. Although it’s unclear how a lot involvement every of them had in FTX’s fraudulent practices, it’s identified that they have been all a part of the inside circle that Bankman-Fried confided in as he presided over his empire. 

After we have been placing collectively our record, one member of our editorial crew mentioned that “Bankman-Fried is to crypto what Palpatine is to Star Wars.” In different phrases, he’s as despicable because it will get, and people who enabled his actions aren’t a lot better. We sincerely hope that justice is served in 2023. Chris Williams

Do Kwon 

Till a couple of month in the past, there was just one contender for our number-one villain spot: Do Kwon. However whereas the failed Korean entrepreneur in all probability isn’t as horrible as Sam Bankman-Fried, he’s indisputably chargeable for colossal injury and struggling that may maintain the crypto ecosystem again for years. 

Much like Bankman-Fried, Kwon was a whizz child who turned a famous person nearly in a single day. On many events, he made it apparent that he didn’t know learn how to deal with the celebrity. As Terra soared to new excessive after new excessive and his paper riches grew, he began calling himself the “Grasp of Stablecoin” and dismissing others who hadn’t occurred to invent a flawed money-printing algorithmic stablecoin as “poor.” Kwon loved the limelight however he had skinny pores and skin; he proved that when he unleashed assaults like that “your size is not size” tweet that turned the stuff of Crypto Twitter legend. There was additionally a laughable lawsuit menace that Terraform Labs despatched to Crypto Briefing after we revealed a satirical warning that Terra would fail close to LUNA’s prime on April Fools’ Day, however that ended up wanting simply as silly as his hubris-filled tweets as soon as Terra suffered its inevitable demise. Neither Kwon nor his legal professionals have responded to any of our messages requesting feedback on Terra’s implosion. 

It ought to go with out saying that Kwon is one in every of crypto’s largest villains ever, particularly given the destruction that Terra’s failure has prompted. Kwon has instructed that Terra was a market failure, as if Terraform Labs’ efforts to model UST as a “stablecoin” have been legit and above board. He’s additionally maintained that LFG’s reserves went into saving UST, denying allegations the funds have been moved elsewhere. 

Whereas we are able to’t show something and he’s evaded most troublesome questions following the demise spiral, we suspect that Kwon had a sense that Terra would fail, which could be why he dedicated to accumulating a Bitcoin reserve fund by the Luna Basis Guard. If he was conscious of Terra’s future, which is believable given his ties to Foundation Money, that solely makes his actions extra deplorable. 

Terra’s collapse led to very large monetary losses and, within the worst instances, suicides, however Kwon has proven little regret. He tried to relaunch Terra even after repeated calls to vanish from crypto endlessly and has made it clear that he nonetheless loves consideration, showing on Crypto Twitter and podcasts as soon as Bankman-Fried took his place on the villain prime spot. 

Kwon made it onto Interpol’s pink record in September, however he insists that he’s not “on the run.” We’re unsure what else fleeing your nation of residence and refusing to disclose your location may very well be known as, however then nothing he’s mentioned this yr must be taken too severely. 

Kwon did have one pearl of knowledge, although. In a single interview, he infamously warned that “the failure of UST is equal to the failure of crypto itself.” After the chaos that Terra prompted this yr, his message proved to be extra on-point than anybody of us dared to think about. Chris Williams

Su Zhu and Kyle Davies

Within the laundry record of disgraced founders that met their very own undoing this yr, maybe none have been as revered as Su Zhu and, by extension, his companion Kyle Davies. Davies might have been complicit in what turned out to be one more multibillion-dollar rip-off, but it surely was Zhu, along with his mysterious persona and cryptic, zen-like tweets, who captured the creativeness and impressed disciples. 

Zhu and Davies launched Three Arrows Capital in 2012 and located success in foreign currency trading earlier than pivoting to crypto in 2018. Zhu famously known as the underside of 2018 crypto winter after watching Bitcoin’s staggering run-up the earlier yr. “We are going to pump off the underside extraordinarily rapidly, leaving most sideline buyers caught in fiat,” he tweeted on December 21, 2018. Bitcoin was buying and selling at $4,000 on the time, whereas Ethereum had simply touched double digits. 

By 2021, the market hailed Zhu and Davies as geniuses, pontificating knowledge and strolling the earth because the residing embodiment of success. 3AC’s principal shill was that crypto had crossed the brink into “the Supercycle,” a thesis that claimed crypto had grow to be resistant to sharp drawdowns owing to growing mainstream curiosity within the area. The jargon is dense however the thought isn’t—Zhu and Davies merely satisfied quite a lot of good, wealthy, profitable folks that the worth of Bitcoin would by no means right once more in precisely the best way it at all times had earlier than.

Not solely that, however everybody within the crypto enterprise was getting in on 3AC’s motion. When the market boomed all through 2021, so did 3AC and everybody alongside for the trip. 

However everyone knows what occurred subsequent. When costs declined, a complete ecosystem that trusted them persistently trending up endlessly fell in on itself. The Supercycle principle was “regrettably wrong,” Zhu later mentioned on Twitter, in all probability in opposition to the needs of his legal professionals. “Regrettable” is one phrase for it; “stupidly irresponsible” could be one other. It’s one factor to have an exuberantly bullish stance on one thing; it’s one other factor to guess the whole lot on it, particularly if that features different individuals’s cash.

And whenever you begin to hint whose cash was whose, the result’s a grotesque net of incestuous, high-risk, leveraged buying and selling amongst a well-recognized solid of unruly characters, with 3AC proper within the got-dang center of it.

Quickly after it turned clear that 3AC was bust, Zhu and Davies successfully disappeared—Zhu stopped tweeting, they stopped turning as much as their workplace, and even stopped answering the telephone. We scarcely heard a phrase from both of them, save for a Bloomberg interview through which the pair tried to downplay antics like their plans to spaff $50 million on a Dogecoin-themed superyacht. 

They’ve since resurfaced on Twitter to goad Sam Bankman-Fried following FTX’s collapse, with some speculating that they may very well be trying to elevate a brand new fund. Whereas they’re nonetheless lacking IRL, Davies has been spouting disingenuous platitudes and insisting they’ve “a story to tell,” as if this have been a primetime Oprah particular and never a multi-billion-dollar fraud. 

Zhu, in the meantime, has been surfing. Jacob Oliver

Alex Mashinsky

Alex Mashinsky is the previous CEO of Celsius, a lending agency that froze buyer withdrawals on account of “excessive market situations” in June then filed for chapter weeks later. Celsius was one in every of a number of dominoes to fall following Terra and Three Arrows Capital’s blowups, however the firm’s chapter filings revealed that Mashinsky was in charge for a lot of of its troubles.  

By promoting undercollateralized loans and taking huge threat, Celsius ended up with a ten-figure gap in its steadiness sheet—a gap that Mashinsky tried to shore up by directionally buying and selling Bitcoin with buyer funds, shedding much more within the course of. One other of Mashinsky’s good concepts was to carry onto Celsius consumer funds and anticipate up solely mode to renew available in the market to pay them again, however by then he was not in management. He additionally proposed for the corporate to rebrand to “Kelvin” and concentrate on providing custodial providers for crypto customers, however that plan had no legs both. He resigned as CEO in September. 

It was later revealed that Mashinsky and different executives had withdrawn tens of millions of {dollars} from Celsius earlier than locking out their prospects, one other bombshell revelation that ought to certainly assure his time behind bars. 

Mashinsky turned well-known for peddling the slogan “Banks are usually not your pals” on Celsius-branded merchandise. Much like different villains on this yr’s record, he rose to prominence by making out that he was a Robin Hood determine, however in actuality he was nearer to Prince John—a grasping, deceitful idiot who guess the whole lot and misplaced. 

Contemplating Mashinsky’s liberal perspective towards dealing with consumer funds, it’s a miracle that he’s nonetheless strolling free. And perhaps he is aware of this all too nicely: two weeks after Celsius froze buyer funds, the corporate needed to situation a press release denying that Mashinsky had tried to flee the US. Tom Carreras

Avraham Eisenberg

So far as villains go, Avraham Eisenberg is a “lawful evil” operator. A self-described “utilized sport theorist,” Eisenberg rose to prominence when he introduced that he was chargeable for the $100 million exploit on Solana DeFi protocol Mango Markets in October. 

Eisenberg took benefit of the low liquidity ranges on Solana to control the worth of Mango Markets’ MNGO token. After artificially elevating MNGO’s worth, he used it as collateral to withdraw belongings from the protocol. This left Mango Markets with $100 million of “dangerous debt” to customers that had deposited belongings into the protocol. 

Whereas most onlookers would say that Eisenberg had clearly exploited a weak DeFi protocol, he unapologetically referred to the act as “a extremely worthwhile buying and selling technique.” Predictably, this ruffled feathers within the crypto neighborhood. Some onlookers preserve that Eisenberg used the protocol as supposed, so his exploit was truthful sport. Others are much less satisfied. 

Eisenberg’s Mango Markets assault later impressed the same $1 million exploit on Solend; Eisenberg denied any involvement within the incident in a message to Crypto Briefing. DeFi favourite Aave was additionally hit quickly after the Solana DeFi assaults when somebody manipulated the worth of Curve Finance’s CRV token; nonetheless, this exploit appeared to backfire and misplaced the perpetrator cash. Eisenberg is extensively believed to be the Aave attacker, however he advised Crypto Briefing he was not chargeable for any “manipulating” on CRV’s worth. Nonetheless, he didn’t hesitate to capitalize on the incident over on Crypto Twitter. “Couple extra liquidations then up solely,” he joked in a determined bid for likes and retweets following the incident, referencing a legendary meme from Three Arrows co-founder Kyle Davies.

Whereas Eisenberg has wreaked havoc in DeFi and left behind a path of destruction, there’s a good argument that he’s truly a villain the crypto trade wants. If DeFi is to scale, it must be failproof, and folks like Eisenberg are taking part in an element in making it safer by stress testing protocols with an abundance of capital and knack for sniffing out vulnerabilities. Tim Craig 

Michael Patryn AKA 0xSifu

Wonderland Cash was a breakout star of the 2021 bull run. Based by Daniele Sestagalli with a treasury managed by pseudonymous crypto character 0xSifu, the Avalanche-based DeFi mission was extensively thought to be the one profitable OlympusDAO fork. Nonetheless, the whole lot got here crashing down in January 2022 when the crypto neighborhood found 0xSifu was QuadrigaCX’s prison co-founder Michael Patryn. QuadrigaCX turned one in every of crypto’s most controversial exchanges after shedding $200 million in buyer funds. Patryn had already been convicted of a number of crimes earlier than his involvement within the firm, together with identification theft and conspiracy to commit bank card fraud. So it’s fairly comprehensible that TIME holders turned involved about leaving him in command of the $700 million that, on the time, constituted the Wonderland treasury. 

Sestagalli’s status by no means recovered after it was revealed that he had stored 0xSifu’s identification underneath wraps. Neither did 0xSifu’s, however that didn’t cease the previous convict from staying energetic on Crypto Twitter and mocking on the neighborhood’s diatribes in opposition to him. Greater than anybody else on our record, 0xSifu has leaned into his “villain” persona, regularly posting memes warning individuals to not belief him with their funds. He additionally launched a nugatory meme token and pressured by a Wonderland proposal to allocate $25 million into it. Did 0xSifu’s brazenness function inspiration for Do Kwon and different crypto villains to unapologetically stick round after they fell from grace? If that’s the case, they nonetheless have a lot to study from the grasp. Tom Carreras

Martin “Syber” van Blerk

Should you learn Crypto Briefing’s current Heroes of the Yr record, you’ll have seen Pixelmon’s zombie turtle Kevin make a considerably unconventional look. Since we’ve acknowledged how one poorly-rendered sprite helped individuals discover humor in one of many largest NFT rug pulls in historical past, it’s solely proper that its perpetrator holds a spot on our villains record. 

Martin van Blerk began the Pixelmon mission underneath the pseudonym “Syber” in late 2021. The mission talked an excellent speak and lured in hundreds of speculators regardless of its eye-watering 3 ETH mint worth. Nonetheless, as soon as the Pixelmon euphoria died down, many who had aped in needed to face actuality.

It turned out that Pixelmon’s advertising and marketing was all a ruse to trick overly optimistic minters into handing over their ETH. The artwork was copied, the execution sucked, and communication was patchy. As stress mounted, van Blerk revealed his identification, and it turned obvious that the NFT neighborhood had simply handed over tens of millions to an inexperienced youngster who was in method over his head. 

Some have since defended van Blerk and blamed minters for dashing into Pixelmon with out doing correct analysis. However so far as we’re involved, he knew what he was doing, even when he didn’t count on his rip-off to be as profitable because it was. To be truthful to van Blerk, he has since used the $71.4 million raised to rent a correct crew of builders and artists, and Pixelmon is beginning to appear to be it might grow to be a half-decent sport—when it will definitely launches. However that’s in all probability not a lot comfort for many who have been tricked into shopping for into the mission underneath false pretenses. Tim Craig

Justin Solar 

TRON founder Justin Solar has at all times been a controversial figure in crypto, however this yr he took his enterprise machinations to a brand new degree by capitalizing on a number of tragic occasions. Every time there was worry, uncertainty, or a lack of consumer funds, Solar has come out of the woodwork to hawk schemes and revenue from the chaos. 

In Could, he doubled down on plans for his USDD algorithmic stablecoin days after Terra’s UST collapsed in a whirlwind demise spiral. Solar watched as droves of buyers misplaced their life financial savings betting on Terra and its cheerleader Do Kwon, however that wasn’t sufficient to dissuade him from selling his personal dollar-pegged asset, promising “zero-risk” yields of as much as 30%, days after the collapse. By all accounts, Solar noticed Terra’s downfall not as a warning however as a possibility to make the most of beleaguered buyers burned by a competitor. 

Later within the yr, Solar resurfaced to promote his allegiance with Chandler Guo’s plan to fork Ethereum after the community’s “Merge” to Proof-of-Stake. Whereas most onlookers noticed the fork for what it was—an opportunistic money seize—Solar was relentless in his makes an attempt to revenue from the Merge hype. 

Nonetheless, Solar’s most egregious plot focused these with funds trapped on FTX after the trade declared chapter on November 11. TRON offered a “liquidity provision” to FTX, facilitating withdrawals for a number of Solar-affiliated tokens. As there have been so many FTX customers attempting to get funds off the trade, these tokens’ costs skyrocketed. Customers paid enormous premiums on tokens like TRX and HT, permitting TRON to dump them at jacked-up costs and pocket the distinction. On this method, Solar immediately profited from the terrible scenario FTX left its prospects in. Tim Craig

Gary Gensler

In a yr marked by a pointy uptick in regulatory motion from the U.S. authorities, it was troublesome to kind by which company was this yr’s most nefarious—between the CFTC’s crackdown on DAOs to the Treasury unilaterally outlawing Twister Money, it’s arduous to restrict ourselves to only one for this record.

However who’re we kidding? Everybody is aware of this yr’s coverage villain is Gary Gensler.

Sure, the SEC chair himself nonetheless stands tall because the crypto neighborhood’s most-reviled regulator in Washington. Lately Gensler has drawn specific ire for his alleged connections to FTX and its officers. Gensler was a colleague of Caroline Ellison’s father, Glenn Ellison, who chaired the economics division at MIT when Gensler was on the college there. Caroline, who was finally made CEO of Alameda Analysis, has an extended (and reportedly romantic) historical past with Bankman-Fried, courting again to their time working collectively at Jane Road. It’s a small world, in any case.

Whereas it’s clear that there’s a minimum of some private acquaintanceship between these characters,  there may be not but proof of something we might name prison conspiracy. It’s true that Gensler met with Sam Bankman-Fried in March of this yr, however little is thought concerning the content material of the dialog. Fox Enterprise reported that Gensler crammed the assembly with a 45-minute lecture on U.S. securities legal guidelines with out listening to out Bankman-Fried’s issues, which frankly rings extra true to my ears than the concept of any intentional collusion, as some are suggesting. It was additionally reported that Gensler’s pontifications included a warning about preserving Alameda and FTX strictly separate, which, if true, makes Bankman-Fried look even worse, not Gensler.

Nonetheless, there has hardly been such a constant, omnipresent boogeyman looming over the area as Gary Gensler, who has skilled his horrible gaze on the crypto trade just like the Eye of Sauron. And but, the very fact stays that Sam Bankman-Fried, who was galavanting round Capitol Hill, snapping pics with lawmakers and taking conferences with the SEC Chair himself, orchestrated what appears to have been the biggest (and arguably least competent) fraud within the historical past of the trade—and he did it proper underneath Gensler’s very nostril.

There are actual questions on why Gensler, infamous for respiration down the neck of the crypto neighborhood, missed the wolf in sheep’s clothes parading round his stomping grounds. It hints at both ignorance, incompetence, or complicity, and it’s arduous to say which of the three could be the worst. Jacob Oliver

Justin Trudeau

Canadian Prime Minister Justin Trudeau angered the crypto neighborhood in February for his draconian dealing with of the “Freedom Convoy” protests. When Canadian truckers blocked the streets of Ottawa in protest in opposition to COVID-19 vaccine mandates and restrictions, Trudeau responded by invoking the Canadian Emergencies Act. The choice granted the Canadian authorities energy to freeze the financial institution accounts of demonstrators (and of any people supporting the protests by donations) with out offering them recourse. The truckers countered by switching to Bitcoin and different crypto providers; this led the federal government to blacklist a minimum of 34 crypto wallets related to the Freedom Convoy. The choice provoked a powerful backlash, with Coinbase CEO Brian Armstrong and Kraken CEO Jesse Powell urging their respective prospects to make use of self-custodial wallets with a purpose to defend themselves. The Ontario Securities Fee responded by reporting Armstrong and Powell’s tweets to legislation enforcement.

Trudeau’s choice to weaponize monetary establishments in opposition to peculiar Canadians was a surprising show of centralized energy. It additionally confirmed that residents of Western democracies are usually not assured entry to their banking providers. Bitcoin was created exactly to supply a permissionless, censorship-resistant different to such methods. In a twisted method, we must be praising Trudeau for demonstrating the necessity for decentralized monetary instruments; he additionally implicitly proved the resiliency of such applied sciences—whereas the Canadian authorities was in a position to forbid corporations from accepting funds from particular wallets, it couldn’t freeze crypto funds outright. Tom Carreras

Editor’s be aware: This function has been amended to incorporate feedback from Avraham Eisenberg. A earlier model acknowledged that he had attacked Solend and manipulated CRV’s token worth, however he denied these claims. 

Disclosure: On the time of writing, some authors of this function owned BTC, ETH, SOL, AAVE, CRV, and several other different crypto belongings.