The Villains Who Created the 2022 ‘Crypto Winter’… Where Are They Now?

The 2022 Crypto Winter was the darkest period in cryptocurrency history. Billions of dollars in market capitalization evaporated, and the future of the entire industry was precarious.

Today, many individuals who contributed to the severe downturn are still imprisoned, awaiting sentencing, or repaying debts.

2022, With Defaults and Bankruptcies Following COVID, 'Crypto Winter'

The notorious Crypto Winter was caused by multiple factors starting from early 2022.

In the aftermath of the COVID-19 pandemic, the global economy faced serious challenges including high inflation, rising interest rates, and recession concerns. These economic headwinds created a difficult environment for the cryptocurrency market and contributed to its decline.

Beyond these broad economic pressures, specific events within the cryptocurrency market intensified the downturn, causing a crisis across the entire industry. The most notable events included the collapse of FTX and Terra-Luna, Three Arrows Capital's default, and the bankruptcy of major cryptocurrency lending platforms.

These major failures and fraud allegations permanently linked several figures like Sam Bankman-Fried, Caroline Ellison, Do Kwon, and Alex Mashinsky to the Crypto Winter.

Three years later, the cryptocurrency industry has achieved significant recovery and considers that difficult period as the past. However, those responsible are still dealing with its aftermath. Where are they now?

Bankman-Fried (FTX Exchange)

Sam Bankman-Fried (SBF), the founder and former CEO of FTX Exchange, is serving a 25-year sentence in a federal prison in California. Recent reports suggest he could be released in 4 years due to good behavior and participation in prison programs, which would mean his release in 2044.

At the end of 2023, SBF was found guilty of fraud and conspiracy charges for misappropriating billions of dollars in FTX customer funds.

FTX, which filed for Chapter 11 bankruptcy in 2022, is in its final stages. Surprisingly, the process has been successful, recovering over $14.5 billion in assets. In May, FTX announced it expects to repay 100% of bankruptcy claims with interest to non-governmental creditors.

Caroline Ellison (Alameda Research)

Caroline Ellison was the CEO of Alameda Research, a quant cryptocurrency trading company founded by SBF. She is currently serving a 2-year sentence for her role in the fraud.

Ellison began her sentence in early November 2024 at a low-security federal prison in Connecticut. She received a significantly reduced sentence due to extensive cooperation with authorities, including testifying in Sam Bankman-Fried's trial. Like Bankman-Fried, her sentence has recently been reduced by several months due to good behavior.

Alameda Research was the primary destination for misused FTX customer funds. FTX reportedly sent billions to the trading company to repay debts and support its activities. Like FTX, Alameda Research filed for bankruptcy in 2022 and is no longer an active trading company.

Remaining assets are now part of the larger FTX bankruptcy proceedings.

Do Kwon (Terraform Labs)

Do Kwon, co-founder of Terraform Labs, is still awaiting trial following the catastrophic collapse of his company's stablecoin TerraUSD and its sister token Luna in May 2022. Within days, this event evaporated approximately $40-60 billion in market capitalization from the cryptocurrency ecosystem.

He was arrested in March 2023 in Montenegro for using forged travel documents. After numerous legal battles, Do Kwon was extradited to the United States in December 2024 to face federal criminal charges.

Upon arrival in the US, a federal grand jury indicted him on multiple felony charges including securities, commodity, and wire fraud, conspiracy, and money laundering. Do Kwon has pleaded not guilty to all charges. His criminal trial is scheduled to begin in January 2026 in the New York District Court.

Last year, the US Securities and Exchange Commission (SEC) held Do Kwon and Terraform Labs civilly responsible for fraud. They tentatively agreed to a settlement with the SEC, which included substantial monetary penalties. This settlement effectively banned Do Kwon and Terraform from the securities industry.

Meanwhile, Terraform Labs filed for bankruptcy in January 2024 and is currently undergoing liquidation proceedings. This process involves selling remaining assets to fulfill financial obligations and resolve outstanding claims.

Alex Mashinsky (Celsius)

Alex Mashinsky, the former CEO of Celsius Network, has been sentenced to 12 years in federal prison after pleading guilty to commodity and securities fraud. Sentenced last May, the punishment includes release under three years of supervision, a $50,000 fine, and forfeiture of $48.4 million in illegal proceeds.

Celsius Network promised high interest rates on cryptocurrency deposits, but Mashinsky's guarantees were proven false. The platform made risky private investments, including unsecured loans. Mashinsky was also accused of inflating Celsius's token (CEL) price and personally profiting from it.

As the cryptocurrency market shook in mid-2022, Celsius froze all customer withdrawals on June 12, holding billions of dollars. A month later, it filed for Chapter 11 bankruptcy, exacerbating the crypto winter.

Celsius has emerged from bankruptcy and restructured its operations. It has begun distributing over $3 billion to creditors, who now co-own a new Bitcoin mining company, Ionic Digital Inc. Celsius is also currently pursuing a $4 billion lawsuit against Tether for improper Bitcoin collateral liquidation.

Su Zhu, Kyle Davies (Three Arrows Capital)

Su Zhu and Kyle Davies, co-founders of the once-famous cryptocurrency hedge fund Three Arrows Capital (3AC), remain embroiled in legal disputes.

Zhu was arrested in Singapore in September 2023 for contempt of court, sentenced to 4 months in jail and released, but continues to appeal court summons. Davies primarily avoids liquidators. Both founders have been banned for 9 years by Singapore financial regulatory authorities.

3AC's aggressive, high-leverage trading strategy and significant exposure to the Terra ecosystem proved catastrophic. When TerraUSD lost its peg and Luna crashed in May 2022, 3AC suffered massive losses and failed margin calls from multiple lending institutions.

This bankruptcy and June 2022 liquidation caused major contagion effects, causing significant pain to cryptocurrency lending platforms that had made large loans to 3AC, becoming a key catalyst for the 2022 crypto winter.

3AC remains in liquidation and is managed by court-appointed liquidators. They aim to recover assets for creditors who have filed claims exceeding $3.5 billion.