Santa’s crypto ‘naughty’ list 2022

Santa’s crypto ‘naughty’ list 2022

The cryptocurrency industry has seen more than its fair share of controversies, scams and questionable decisions this year.

From the demise of the ambitious Terra blockchain with megalomaniac Do Kwon to the domino effect on now-bankrupt firms and the stunning collapse of FTX, a new batch of controversial figures have emerged – and they’re on Santa’s naughty list. (Click here for this year’s Nice list.)

Sam Bankman-Fried

Once a mainstream media darling, former FTX boss Sam Bankman-Fried turned from hero to villain when FTX collapsed this year. FTX’s bankruptcy and the subsequent unraveling of SBF’s “effective altruism” routine, allegations of fraud and abuse customer fundssecret political donationsand reports of a raging Bahamas”polysphere” land SBF on top of Decrypthis naughty list. (As by far the biggest newsmaker of the year, he is also Person of the Year.)

Just months before FTX’s bankruptcy, SBF had positioned itself as a sort of crypto savior, offering to rescue companies such as Voyager Digital and BlockFiwhich had become insolvent due to exposure to Do Kwon’s Terra – which itself collapsed in May.

SBF had said he had billions to spare – but all the money quickly disappeared when FTX experienced a bank run following revelations that its sister company, Alameda Research, was essentially broke. Alameda, as it turned out, had mostly illiquid tokens on its balance sheet, and much of it was in FTT – FTX’s own token.

When reports began to emerge that SBF was allegedly misappropriating client funds and funneling assets through Alameda, SBF revealed that he was never the pro-regulation corporate democrat he had positioned himself to be. In reality, SBF made just as much”dark” donations to the Republican Party, and admitted to a Vox reporter that his interest in “effective altruism” was largely a sham.

Caroline Ellison

Caroline Ellison is the former CEO of Alameda Research, FTX’s sister company that has been accused of mishandling FTX client funds to engage in billions of dollars in high-risk leveraged trades. Inine additions to her high-risk trades, a The Tumblr blog associated with Ellison also suggests an interest in Nazi-adjacent philosophies such as racial science. The account also advocated “imperial Chinese harem” polyamory and had the username “Fake Charity Nerd Girl”.

Do Kwon

Do Kwon is CEO of Terraform Labs and founder of the Terra blockchain and its failed algorithmic stablecoin TerraUSD, or UST, which destabilized from its coupling in May of this year, causing the prices of both UST and LUNA to crash. This was a major financial shock to the crypto industry, and third-party exposure to Terraform Labs, UST, and LUNA created a ripple effect, sending BlockFi, Voyager Digital, Three Arrows Capitaland other firms in deep financial trouble.

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But not only was Kwon the CEO behind the now-collapsed project and its associated tokens, but he was also known for his cocky attitude on Crypto Twitter. He later said that he developed the persona for “entertainment value” and regretted so much “shitposting” on the social media platform.

Now Kwon is at Interpol’s Red alert list, no longer allowed to have one South Korean passportand facing one 57 million dollars class action in Singapore, among others. His current location remains unknown, although he denies being “on the run” from the authorities.

Elon Musk

Oh, Elon. The CEO of Tesla, SpaceX and the Boring Company also (reluctantly) became CEO of Twitter this year. After trying to back out of a $44 billion buyout deal, Musk has bought Twitter and immediately things shook up – dramatically.

He began firing the majority of Twitter’s workforce, putting Twitter’s crypto products on holdtold employees to get “extremely hardcore” or quit, eliminated employee benefits and started putting beds inside Twitter’s headquarters.

While he has yet to solve Twitter’s persistent bot problem, he did allow anyone to buy a blue tick for a few days — leading to advertisers pulling out en masse and much confusion as seemingly “verified” users impersonated brands.

And when it comes to crypto, Musk has paper hands. Tesla sold 75% of Bitcoin in July this year because it said “Bitcoin write-downs” affected the company’s overall profitability. Tesla dumped roughly $936 million worth of Bitcoin back into the market despite Musk’s promise in 2021 that Tesla would not sell “any Bitcoin” it owned.

Jesse Powell

While Jesse Powell’s San Francisco-based crypto exchange Kraken remains afloat, Powell hasn’t exactly been playing the “nice guy” this year. He announced that he is stepping down from the role of CEO. And Kraken has faced several waves of employees layoffs despite the company claiming in June that it was going to have a “global hiring pressure,” had not changed its “hiring plan” and would not lay off staff, but claimed it still had “over 500 roles to fill” in 2022.

Powell has too recorded with anyone who wants to discuss “pronouns”, called American women “brainwashed”, and previously said that the N-word, in his view, was not a dull if used lovingly. Yep.

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Changpeng “CZ” Zhao

Binance CEO Changpeng “CZ” Zhao Makes Our “Naughty” and our “nice” list this year, largely for the same reason: the tweet that brought down FTX (about CZ chooses to see it that way or not).

Some quick background: As an early investor in FTX, Binance received a large share of FTT tokens—5% of the entire offer— when FTX bought out Binance’s equity in the company last year.

When it came out that most of the assets on Alameda’s balance sheet were FTT tokens, CZ tweeted that he planned to start selling off Binance’s holdings of FTT, “due to recent revelations that have come to light.”

That tweet apparently inspired other FTT holders to follow suit, and the selloff collapsed the price of the token. This in turn led to a bank run on FTX, and the liquidity crisis then quickly forced the exchange to close and then file for bankruptcy.

Zhao rejects the idea that his tweets may have led to or precipitated FTX’s bankruptcy, writing December that “no healthy business can be destroyed by a tweet.” That may be true, but there’s no doubting what CZ’s tweet did for market sentiment.

And while there’s an argument to be made that helping expose the FTX scam for what it was is a net positive for crypto in the long run (which is why CZ is also on the “Nice” list) , FTX customers who still have funds trapped on the exchange probably wish things had worked differently.

Avraham Eisenberg, Mango Markets hacker

What’s a bad crypto list without hackers? In October, Solana DeFi platform Mango Markets suffered a massive 100 million dollars hack. Mango Markets said the attack occurred through price manipulation by an oracle. The platform’s liquidity was drained and it had to stop deposits. Fortunately, some of the funds eventually came to fruition recovered.

Avraham Eisenberg later identified themselves as part of the team that hacked the protocol, he said that behavior was legal. He later tried another exploit on Aave protocol, but failed and lost millions.

BNB bridge hacker

Binance’s Smart Chain Bridge was hacked for a staggering 570 million dollars in October. But Binance CEO Changpeng “CZ” Zhao said that nearly 90% of the swiped tokens were frozen on the blockchain, and the Binance Smart Chain was halted.

Shortly after, Binance burned badly 2 billion BNB tokens in its 21st quarterly token burn, a move that helped make up for the losses incurred as a result of the hack.

Lazarus

It should go without saying that any group of North Korean cryptohackers easily qualifies for Santa’s naughty list. Lazarus is a North Korea-backed hacker group that has attacked crypto companies in Japan and was blamed for the massive 622 million dollars Ronin bridge hack earlier this year. It has also been accused of being behind the $100 million Harmony Protocol hack.

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What is their strategy? The group often uses phishing scams, posing as companies or other entities with links and attachments containing malware. In fact, Lazarus was so destructive this year that the US government said Lazarus’ repeated use of Tornado Cash was a major reason why the Treasury Department sanctioned the privacy interference protocol this year.

“Monkey Drainer”

Are all your monkeys gone? It might have been the infamous “Monkey Drainer” hacker. The NFT “drainer” tool has estimated thieves 4.3 million dollars or more this year. While Monkey Drainer is likely one person – as blockchain examiner ZachXBT previously shared Decrypt– The creator probably also sells the malware extraction tool as a service to other ambitious attackers, and the creator takes a percentage of the bad profits.

Pixelmon founder “Syberer”

Would you pay $8000 for an ugly stock rendering of a pixelated creature? We didn’t want that either. But back in February, the NFT market saw unprecedented speculation – and collections launched at sky-high prices left and right. The Pixelmon Ethereum NFTs were designed to be characters for an upcoming Pokemon-esque Web3 game. At a more expensive 3 ETH coin ($8,100 at the time), expectations were high.

When the NFT artwork was revealed, the holders felt cheated by the low quality of the assets, and the collection became a laughing stock on Crypto Twitter for weeks.

But one particular Pixelmon – a green, Frankenstein-like creature – became an internet sensation precisely because he was so ugly. Crypto Twitter called him Kevin. Kevin’s shockingly ugly mug inspired NFT designers worldwide to create derivative collections using his name and face.

Pixelmon founder Syberer, aka Syber, admitted the first round of NFT artwork – which gave them 70 million dollars– was a “terrible mistake”. The project took months to renew the collection’s artwork and improve the original designs, which were partly taken from stock models. It has also got a new managing director. Either way, Pixelmon’s hilariously painful $70 million debut definitely qualifies the NFT collection for this year’s badass list.

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