Crypto Crash Rewrites: The Villains and Their New Narratives

The year 2022 saw two huge blows to the crypto world, each led by a different bad actor. In May, Terraform Labs’ UST stablecoin broke its $1 promise and spiralled into hyperinflation. The crash wiped out roughly $40 billion in market value and pushed several crypto firms into bankruptcy, including Voyager Digital and BlockFi. Then in November, the big exchange FTX stopped letting people withdraw money and declared bankruptcy. Reports said that customer funds were siphoned off to cover losses at Alameda Research, pay for real‑estate deals and political donations. Bitcoin fell below $20 000 during this chaos, and links between the two disasters began to surface. The courts finally took action. Terraform co‑founder Do Kwon pleaded guilty to fraud and manipulation over UST’s stability and received a 15‑year sentence. Sam Bankman‑Fried was convicted on seven counts, from wire fraud to money laundering, and got a 25‑year term plus an $11 billion forfeiture order. Yet, both men are now trying to rewrite what happened.From prison, Bankman‑Fried claims FTX was never truly insolvent. He says the platform had more assets than debts, could have paid customers in crypto, and that bankruptcy lawyers rushed the process, costing over $1 billion in fees. He also posted a thread titled “10 Myths About Me & FTX” and is asking former President Trump for a pardon. Most experts disagree, pointing out that if FTX could cover withdrawals, it would not have frozen them. Scholars say a crypto exchange must hold customers’ money exactly as they expect it, and that FTX failed to do so. Even if the bankruptcy paperwork was messy, the core issue remains: customer funds were misused without permission. Meanwhile, Terraform’s liquidation team is suing the trading firm Jane Street. They say insiders at Terraform shared non‑public info with Jane Street, which then rushed to pull large amounts of UST from the Curve3 pool right after Terraform made a secret withdrawal. Critics argue that the real fault lies in UST’s design, which functioned like a Ponzi scheme by promising high yields funded by new deposits. The alleged insider trading may have helped the crash but did not cause it. Fast forward to 2025, Bitcoin has bounced back near $125 000, but other cryptocurrencies have not matched that rally. Altcoins now trail Bitcoin more than they used to during previous bull runs. Many of the top projects rely on centralized stablecoins or tech stacks, which has shifted the conversation in crypto circles. Even Meta is set to add stablecoin support to its services later this year, after a stalled attempt in 2019. The industry now looks more like traditional fintech than the open protocols it once promised.