In 2022, These Crypto Skeptics Turned Out To Be Right

Throughout the decline in digital asset prices this year, a handful of crypto critics began to suspect something more was amiss


yuRomanovich/ modified by Blockworks


Year-old crypto prognostications from industry bulls haven’t fared well in 2022, but a handful of skeptical voices can take heart from a healthy dose of vindication.

From forecasting fraud, to intuiting insolvency, these critics are having their day in the sun.

Among those ahead of the curve on the Terra ecosystem was Kevin Zhou, founder of crypto hedge fund Galois Capital, who had been a notable skeptic of Terraform Labs’ co-founder Do Kwon, long before Terra’s death spiral.

Zhou warned investors of the “systemic risk” posed to the crypto industry by Terra and began tweeting his concerns regularly in March.

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The UST algorithmic stablecoin, which had relied on an arbitrage mechanism between its sister token LUNA to maintain its peg, indeed collapsed in spectacular fashion, dragging the rest of the industry down along with it. 

It is estimated more than $40 billion in value was wiped from the markets as a direct result.

The rest of the cryptoasset market followed suit, with bellwether bitcoin falling some 49% from $34,000 witnessed May 9 through to a June 18 low of $17,500 — at the time bitcoin’s lowest point in one and a half years.

Traditional corporates who had begun to build exposure to digital assets, namely bitcoin, on their balance sheets throughout the previous two years also incurred significant paper losses.

Business intelligence and software company MicroStrategy, the largest publicly traded firm with bitcoin exposure, has repeatedly bought up the crypto, including during several market peaks this year.

MicroStrategy now holds some 132,500 BTC ($2.2 billion), which it acquired for about $4 billion at an average price of $30,397. That represents roughly $1.8 billion in unrealized losses.

Earlier this year, critics such as OANDA analyst Edward Moya, began to pile on against MicroStrategy’s portfolio management as a “reckless” move in a bid to call the bottom — considered a “gamble” by a firm meant to take a more cautious approach. 

From hero to zero

In what was viewed as an echo of the past, with JPMorgan’s intervention of the 1893 panic in the US, former FTX CEO Sam Bankman-Fried began offering acquisition deals in the middle of the year.

Embattled firms like BlockFi and Voyager received bailout offers from FTX in June and July in what later turned out to be an ironic twist of fate following the collapse of the exchange half a year later.

Earlier in the year, FTX raised $400 million in an equity raise, prompting questions over the exchange’s ability to finance its buying spree. Wary of FTX’s growth and exceptional rise in the last two years, certain skeptics had long argued against the exchange’s fundamental business practices.

Critics like Marty Bent, founder of media company TFTC, began to flag concerns over Bankman-Fried’s inability to communicate crypto’s underlying tech, labeling him a “bumbling idiot.”

Wall Street veteran short-seller Marc Cohodes, too, had long questioned FTX and Bankman-Fried’s rise, posing significant doubts over the wunderkind’s origin story as a bitcoin arbitrageur.

“There was nothing ever specific about him that he could articulate that made me think, ‘Ah, that makes sense,’” Cohodes said.

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With revelations coming to light over the alleged fraudulent commingling of user funds between FTX and its sister firm Alameda Research, those few who had voiced concerns turned out to be right.

A White take on the Gray Lady 

When the New York Times published a Kevin Roose “guide” to crypto currencies in March, a group of skeptics, spearheaded by Molly White, published a detailed rebuttal in the form of in-line annotations. It argued that the crypto market was in a speculative tech bubble phase, and that the fact that Matt Damon and Larry David had recently featured in crypto exchange ad campaigns was a clear sign of it.

White has been dutifully calling out the nonsense in the crypto space that Blockworks tends to ignore, like the politically charged NASCAR driver coin Let’s Go Brandon, which ultimately got Republican congressman Madison Cawthorn fined $14,000 on his way out of office.

Calling out scams and rug pulls is an important public service, and the mainstream media recognition of White’s hobby following the Terra crackup was well deserved.

Crypto policy symposium

At around 2,800 tweets per year, Stephen Diehl is like the squeaky wheel of crypto skepticism. As the saying goes, even a broken clock is right sometimes.

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Diehl was one of the organizers of the Crypto Policy Symposium, held in London and online in September. With a top viewed video of about 1,800 views, the panels attracted very little notice, but the attempt to organize an anti-crypto conference at all is itself notable. 

And as 2022 comes to a close, industry participants have been humbly reminded that while there is a desire to do financial good, it takes but a few bad apples to pollute the barrel.

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