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The Future of Cryptocurrency Is in Question | January 2023

Cryptocurrency is a digital exchange medium that uses secure online ledgers enabled by blockchain technology. Crypto has a fluctuating price, which makes it less desirable than fiat money backed by governments (e.g., dollars, yens, and euros). It does not have a stable value or portability, but it does work in a digital economy with instantaneous payments where the transaction size is large and the value of the cryptocurrency is known by both the buyer and the seller. While some investors have become rich by trading crypto, many have lost millions as large, systemic problems in the industry have been uncovered. 

Crypto in crisis 

A series of failures put the spotlight on cryptocurrency. In one of the biggest cryptocurrency breaches of all time, hackers stole more than $600 million in Ether and USDC tokens. Then, terra USD and LUNA failed in a $60 billion meltdown, and Bitcoin, Ether, and other cryptocurrencies felt its effects. The crash created more than $2 trillion in losses in 2022.  

Cryptocurrencies recovered briefly but hit struggled again after the Fed announced a series of interest rate hikes. Then, cryptocurrencies crashed again after Celsius, a crypto loan company with $12 billion in assets under management, paused account withdrawals and transfers due to “extreme market conditions.” 

One of the biggest crises of the year was the collapse of the cryptocurrency exchange FTX. FTX started 2022 with a value of $32 billion but ended the year in bankruptcy. Founder and former CEO Sam Bankman-Fried created a fraudulent crypto scheme to take advantage of investors in what has become one of the largest financial crimes in American history, according to U.S. Attorney Damian Williams. After the company’s business practices were called into question, there was a surge of customer withdrawals, but FTX did not have enough assets in reserve to meet the demand. Bankman-Fried was charged with criminal fraud. 

Why crypto is not favored by the government 

Cryptocurrencies are not favored by governments because the transactions are difficult to trace, making them useful for illegal transactions. For example, cybercriminals who hack computer systems with ransomware often require payment in cryptocurrency because the transfer can’t be traced. 

Charlie Munger, vice chairman of conglomerate Berkshire Hathaway, has expressed concerns about crypto, going as far as to call it “evil.” According to Munger, fraud and delusion have driven people to make poor investment decisions. 

Congress is trying to determine how to regulate crypto. Many lawmakers do not understand cryptocurrency but are understandably alarmed by fraud in the industry. Some proposed measures could give the Commodity Futures Trading Commission (CFTC) more power to regulate digital assets and establish relevant committees to help lawmakers. Financial regulators have even started to go after celebrities that have unlawfully promoted crypto. For example, the Securities and Exchange Commission (SEC) agreed to a $1 million settlement with Kim Kardashian for how she promoted EMAX tokens. 

Many investors wonder what will happen next. Supporters believe the industry will bounce back, but crypto skepticism seems to be at an all-time high. It is still unclear what the future holds for crypto. 

In the Classroom 

This article can be used to discuss cryptocurrency (Chapter 15: Money and the Financial System). 


Discussion Questions 

  1. What is cryptocurrency? 

  1. Why is cryptocurrency not favored by the government?  

  1. Do you agree with Charlie Munger’s assessment of cryptocurrency? Why or why not? 


This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt. 


Amit Chaudhary, "What to Expect from Crypto the Year After FTX," Cointelegraph, December 28, 2022, 

Matt Laslo, "The US Congress Is Starting to Question This Whole Crypto Thing," Wired, November 27, 2022,  

Nathan Reiff, "The Collapse of FTX: What Went Wrong with the Crypto Exchange?" Investopedia, December 22, 2022, 

Weston Blasi, "Why Do People Invest in Crypto? ‘It’s Partly Fraud and Partly Delusion,’ Says Charlie Munger," MarketWatch, December 5, 2022,  

About the Author

Geoffrey A. Hirt of DePaul University previously taught at Texas Christian University and Illinois State University, where he was chairman of the Department of Finance and Law. At DePaul, he was chairman of the Finance Department from 1987 to 1997 and held the title of Mesirow Financial Fellow. He developed the MBA program in Hong Kong and served as director of international initiatives for the College of Business, supervising overseas programs in Hong Kong, Prague, and Bahrain, and was awarded the Spirit of St. Vincent DePaul award for his contributions to the university. Dr. Hirt directed the Chartered Financial Analysts (CFA) study program for the Investment Analysts Society of Chicago from 1987 to 2003. He has been a visiting professor at the University of Urbino in Italy, where he still maintains a relationship with the economics department. He received his Ph.D. in finance from the University of Illinois at Champaign-Urbana, his MBA at Miami University of Ohio, and his BA from Ohio Wesleyan University.

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