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Daily Briefing: Get in Line

The disastrous first half of 2022 may be behind us, but the process of accountability is only just getting started.

Daily Briefing: Get in Line
Shutterstock cover by Proxima Studio

Key Takeaways

  • The first half of 2022 consisted of one disaster after another in the crypto industry, including market meltdowns, failed projects, and multiple bankruptcies.
  • While the worst of the implosion may be behind us, the process of accountability for what went wrong is only just getting started.
  • Few criminal investigations have come to light, but class action suits are moving with lightning speed.

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After an eventful first half of 2022, several major crypto players are facing legal proceedings.

Crypto Firms Face the Music

There’s no way of denying that the first half of 2022 was an outright onslaught of bad news for the crypto industry. Not only were prices steadily declining throughout the first half of the year, but a string of high-profile failures this Spring and Summer—Terra, Celsius, Voyager, and more—have turned what looked like an average market drawdown into a catastrophic implosion. It is reminiscent, and without much subtlety, of an overwhelmed Claudius in Act VI of Hamlet, who moans to Gertrude after one thing after another goes wrong—“When sorrows come, they come not single spies, but in battalions!”

But while it’s impossible to say if the worst of it is over, the worst of it seems like it may be over. The fallout, though, is just beginning.

A few weeks ago, Sam Bankman-Fried commented that he felt the brunt of the liquidity crisis sparked by UST’s collapse was probably behind us. The moment has been compared to forest fire, burning away the dead and the dying and clearing the way for new growth. Like the majestic phoenix rising from its proverbial ashes, the crypto industry can turn its eye toward the future as it leaves the past behind. Right?

Would that it were so. Almost without exception, the failed projects and companies that took the financial interests of thousands of customers down with them find themselves squarely in the crosshairs of authorities everywhere. If that weren’t enough, they’re attracting class action suits like flies, and the private sector law firms are moving fast.

One firm that may become a familiar name as the crypto industry rulebook gets written could be Bragar, Eagel, & Squire, a New York firm specializing in securities and investor protection litigation. Practicing in “sophisticated commercial and securities litigation, including matters involving hedge funds, consumer protection litigation, and insolvency-related litigation,” Bragar, Eagel & Squire have quietly emerged as a would-be champion of the swindled crypto investor. With a suit list reading like a Who’s Who of failed or floundering crypto projects, the firm has filed securities class action suits against defendants including Coinbase, Celsius, Solana Labs, Bakkt, Terraform Labs, Jump Trading, and Three Arrows Capital, just to name a few.

More importantly, they’re still onboarding plaintiffs in many of these cases. This is not financial advice—or really any kind of advice, for that matter—so I will not tell anyone reading this who lost money in any of these protocols or companies to add their names to the plaintiff lists. But if I were to just leave a link to their list of pending cases here, the reader is free to do whatever they will with that publicly available information.

Of course, no one can say what the outcome of these cases will be or if investors will ever be made whole. It’s the kind of traditional, old-world accountability that’s finally starting to assert itself over the space, though whether that’s good or bad is up for debate. However, one thing that seems clear is that if 2021 said, “move fast and break things,” 2022 says, “not so fast.”

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. He was also a Celsius Network customer and a participant in Bragar, Eagel, & Squire’s class action suit against Celsius.

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