After a brutal stretch, a remarkable thing is happening: Cryptocurrencies are surging
ARI SHAPIRO, HOST:
It's been a wild ride for cryptocurrencies in 2023. One major twist was the conviction of Sam Bankman-Fried on money laundering and fraud charges. He was once one of the biggest names in crypto. Now he might spend the rest of his life in prison, and law enforcement is going after some of his rivals. Despite this crackdown, crypto is staging something of a comeback. NPR's David Gura is here with a look at where things stand in the world of crypto. Hey, David.
DAVID GURA, BYLINE: Hey, Ari.
SHAPIRO: What else shaped this year in crypto?
GURA: You know, it's been an incredible couple of years. Going back to 2022, I'm sure you remember, crypto seemed to be everywhere then. When you were watching TV, there were all these ads for crypto companies. One of the big ones featured Larry David, the comedian. It was for the cryptocurrency exchange FTX, and it aired for the first time during the Super Bowl.
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MICHAEL DEARIE: Like I was saying, it's FTX. It's a safe and easy way to get into crypto.
LARRY DAVID: Yeah, I don't think so, and I'm never wrong about this stuff - never.
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GURA: Well, that line now seems pretty prescient. FTX collapsed spectacularly in November of 2022.
SHAPIRO: Yeah.
GURA: And this year it's been going through bankruptcy proceedings. Its founder, Sam Bankman-Fried, was found guilty of fraud and money laundering. And this is what U.S. Attorney Damian Williams said outside the federal courthouse in Manhattan after that verdict.
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DAMIAN WILLIAMS: The cryptocurrency industry might be new. The players, like Sam Bankman-Fried, might be new. This kind of fraud, this kind of corruption is as old as time, and we have no patience for it.
GURA: You know, this was a pivotal moment in crypto, a dramatic fall from grace for Sam Bankman-Fried, someone who was once called crypto's golden boy. And, you know, a lot of people thought that blockbuster trial, that verdict would shape popular perception of digital currencies, that it would kind of reinforce what law enforcement and regulators have been saying - that this is an industry that's rife with fraud. Well, it turns out, Ari, that verdict was not crypto's death knell.
SHAPIRO: Yeah. Tell us about what happened.
GURA: Believe it or not, after that conviction, we saw this huge rally in cryptocurrencies. The price of bitcoin has tripled this year. It's now above $40,000. It turns out a lot of crypto true believers and Bitcoin investors saw that conviction of Sam Bankman-Fried as a good thing for crypto. A fraudster faced justice, and crypto got rid of a bad actor. This year has been a boon to companies that have survived a market downturn that has come to be called a crypto winter. Coinbase, for instance, another big cryptocurrency exchange, has surged in 2023. Its stock is up around 400% this year. And then there's this hope driving prices higher that the SEC could approve a new ETF. These are funds that track things like a group of stocks or an index. A common one tracks the S&P 500's ups and downs. Well, several companies want to start ETFs that would track the price of bitcoin. And I asked Kevin Werbach, who's a professor at Wharton, why that would be significant.
KEVIN WERBACH: It would potentially open up the door to lots and lots of people who say, look. I don't buy this entire crypto story, but Bitcoin sounds interesting.
GURA: And if the SEC approves it, a Bitcoin ETF would be another way into crypto, Ari, and it would also give crypto some more legitimacy.
SHAPIRO: So where do you think things are headed in 2024?
GURA: Of course, I don't know for sure, but clearly, if the SEC approves that new investment product, it would be another big moment in crypto's still pretty short history. What we do know is that regulators and law enforcement are going to continue to go after crypto. Just a few weeks after Sam Bankman-Fried was convicted, the Department of Justice announced a major settlement with Binance, which was once one of FTX's competitors. Binance's founder, now former CEO Changpeng Zhao, who's better known as CZ, pleaded guilty to violating anti-money laundering laws. So we have two of what were the biggest names in crypto now facing prison time. I asked the acting assistant attorney general, Nicole Argentieri, what law enforcement's approach to crypto is going to be in the new year, and here's what she told me.
NICOLE ARGENTIERI: Thanks for that question. I would say stay tuned, but we expect to continue our robust enforcement.
GURA: So that means in 2024, there's likely to be more of this tension we've seen this year between crypto trying to stage a comeback and the government continuing this clampdown.
SHAPIRO: OK. My last question is, why do these crypto titans all go by their initials? SBF, CZ - what's going on?
GURA: That is a great question, and it doesn't make it any easier for me to keep track of them.
SHAPIRO: NPR's David Gura. Thanks a lot.
GURA: Thanks, Ari.
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