While the bear market might be substantial due to the FTX fallout, the future is still bright for decentralized investments in crypto and blockchain.
Web3 fundraising was down 24 percent from its peak last year, but the decentralized sector is holding its own in the brutal bear market seemingly caused by the collapse of FTX.
It’s no surprise that decentralized finance (DeFi) and blockchain technology investments took a big blow in 2022, but what’s interesting is just how much venture funding continued to pour into the nascent space.
It has been reported that federal authorities are looking into whether the founder of a cryptocurrency exchange manipulated the markets for two different cryptocurrencies during the summer months of 2018.
Prosecutors in New York City are investigating whether Mr. Bankman- Fried used his control of TerraUSD and Luna to help his own companies, including FTX and its parent company, Alameda Research.
The investigation is in an early stage, and it is unclear whether prosecutors have determined any misconduct by Mr. Bankman Fried or when they started investigating the TerraUSD and Luna transactions. However, the matter is part of a broader inquiry into the fall of Mr. Bankman Fried’s Bahamas-based cryptocurrency business and the potential theft of millions of dollars in client money.
Federal prosecutors and the SEC have been investigating whether FTX violated securities laws by moving customers’ money into its own pockets. In March, a series of withdrawals caused the company to go bankrupt. When the company collapsed, CEO Eric Bankman-Fried resigned.
US regulators have investigated Fintech Trade X (FTX) for possibly breaking anti-money-laundering laws, three sources told Reuters. These investigations were initiated before FTX’s filing for Chapter 11 protection in Delaware last week.
Even though VC funding for blockchain companies dropped by nearly 25 percent compared to last year, there was still more than three times as much money invested in decentralized applications (DApps) than in any other category during Q3 2018.
Growth In Decentralized Investments Sees A Boost
Furthermore, according to CB Insights, general venture funding for blockchain projects is expected to reach an estimated $29 billion by 2022, up from $24 billion in 2017.
Don’t pop the cork just yet; in November, the failure of the second-largest cryptocurrency exchange in the world sent shockwaves through the entire blockchain space, wiping it out.
A famous cryptocurrency analyst has posted a graph showing a strong correlation between the price of bitcoin and monthly funding totals for the past few months.
Analysts say Web3 projects completed 65 funding rounds in November, down from 121 in November 2020.
As for DeFi and Web3, startups have received more than $23 billion in funding since the first three months of 2021, according to data from CB Insights. And VC funding, in general, has dropped to its lowest levels since the first half of last year, according to CB Insiders’ data.
From an optimistic perspective, Web3 decentralized investments appear to grow as their centralized counterparts continue to fall.