Can you believe this year started off with U.S. law enforcement officials arresting two individuals in connection with the 2016 Bitfinex hacked funds? This year did not play out quite as expected. While the idea that the bull market would end and a new crypto winter would hit was understood and expected, the sheer scale of this year’s failures seemed to catch a lot of people by surprise. Next year will not, I suspect, be pretty. Cheyenne Ligon gets into this as well a bit further down, but as the current bankruptcy cases advance and possible new bankruptcies arise, the industry will have to deal more and more with a lot of questions around user privacy and consumer protections.
Whether crypto exchange customers can expect their personal information to remain redacted, should the provider enter bankruptcy, will continue to be a growing question for courts. This year we saw that question arise with companies like Celsius and FTX. Judges initially allowed the companies to file their creditors’ information under seal, but Celsius later released the names and holdings of all of its customers, while FTX is currently going through hearings about the same issue. The U.S. Securities and Exchange Commission (SEC) may also be gearing up to force exchanges into compliance with existing rules. SEC Chair Gary Gensler has long said he believes his agency has the authority it needs to regulate crypto companies, and that the law is clear in his view that most cryptocurrencies are securities and therefore more crypto exchanges are securities trading platforms.
