FICTITIOUS CAPITAL
Cryptocurrencies gain more than half a trillion in value despite controversies

Matthew Field
Fri, December 29, 2023 at 8:40 AM MST·3 min read

Representations of virtual cryptocurrencies on U.S. dollar banknotes

The global value of cryptocurrencies surged by more than $800bn (£631bn) in 2023 as investors continued to pile into the speculative assets despite a series of scandals, bankruptcies and tougher regulation.

After losing more than half their value in the 12 months to December 2022, digital coins rebounded over the last year – with the whole sector worth roughly $1.6 trillion at Christmas.

The price of Bitcoin, the most popular and valuable cryptocurrency, more than doubled, up more than 150pc over the course of the year. A single Bitcoin is now worth north of $42,000, its highest point in 18 months.

Ethereum, the second most popular cryptocurrency, increased its value by 88pc over the year.

Solana, another widely-traded coin, climbed more than 1000pc during 2023. The digital currency data came from Coinmarketcap, which is owned by cryptocurrency exchange Binance.

Bitcoin’s previous high was just over $65,000, amid a buying frenzy in November 2021. High-profile investors including Elon Musk piled into cryptocurrencies, however much of its value was wiped out over the next 12 months.

Yet despite an ongoing series of controversies, cryptocurrencies rebounded in 2023.

Sam Bankman-Fried was found guilty in November on seven counts of fraud, embezzlement and criminal conspiracy - Angela Weiss/AFP

These included the collapse of FTX, the world’s second largest cryptocurrency exchange, in late 2022. The offshore trading house was found to have misused customer funds to prop up high-risk investments and luxury purchases for executives.

Its founder, Sam Bankman-Fried, was found guilty in November of multiple counts of fraud and conspiracy that caused FTX’s bankruptcy.

That same month, the founder of Binance, the world’s largest digital coin exchange, agreed to plead guilty to criminal charges in a case brought by the US Justice Department over money laundering violations.

Changpeng Zhao said he would stand down as chief executive of Binance as part of a deal with prosecutors, while the exchange itself was hit by a $4bn fine.

Changpeng Zhao pleaded guilty to criminal charges in a case brought by the US Justice Department over money laundering violations - Chloe Collyer/Bloomberg

However, despite the scandals, Matteo Grecco, an analyst at cryptocurrency investment firm Fineqia, said the shake-up at Binance had a “positive effect on the market”.

“The agreement between the largest digital asset exchange and US regulators diminished uncertainties, fostering a more optimistic outlook,” he said.

Regulators have also toughened up their stance against digital coins. In the UK, the Financial Conduct Authority introduced new rules in October on how cryptocurrency companies can market to British consumers, ultimately blocking Binance from signing up new UK customers.

In the US, Coinbase, one of the largest digital currency exchanges with a popular app, has been sued by the US Securities and Exchange Commission.

The regulator accuses Coinbase of selling digital coins as unlicensed securities. Coinbase has disputed the claims and insists it does not sell securities.

Amid the crackdown, Coinbase’s stock was up more than 400pc over the course of 2023.