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Looking back, 2023 will likely be remembered as the year of the fallen crypto bro.

While celebrities like Kim Kardashian and Matt Damon last year faced public backlash after shilling for cryptocurrency, this year's top headlines traced the downfalls of two of the most successful and influential crypto bros of all time: FTX co-founder Sam Bankman-Fried (often referred to as SBF) and Binance founder Changpeng Zhao (commonly known as CZ).

At 28 years old, Bankman-Fried made Forbes' 30 Under 30 list in 2021, but within two short years, his recently updated Forbes profile notes that the man who was once "one of the richest people in crypto" in "a stunning fall from grace" now has a real-time net worth of $0.

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Just one day after suing Binance , the US Securities and Exchange Commission (SEC) has now sued Coinbase , the largest cryptocurrency exchange operating in the US.

The SEC alleged that Coinbase has violated laws since "at least 2019" by failing to register both its cryptocurrency trading platform and its crypto asset-staking program. Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said in a press release that Coinbase chose not to register, making "calculated decisions" that "may have allowed it to earn billions" while knowingly depriving Coinbase investors of SEC protections.

"You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Grewal said. "As alleged in our complaint, Coinbase was fully aware of the applicability of the federal securities laws to its business activities, but deliberately refused to follow them."

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Yesterday, a former Coinbase product manager, Ishan Wahi, was sentenced to two years in prison for running the first cryptocurrency insider trading scheme investigated by the United States Department of Justice.

Wahi had pleaded guilty after Coinbase and the FBI found that he provided confidential information on upcoming Coinbase crypto asset listings to his brother, Nikhil, and his friend Sameer Ramani. The multiple tipoffs led to profits of approximately $1.5 million as the men went undetected for 10 months, trading 55 digital assets ahead of Coinbase listing announcements that generally caused huge spikes in asset market valuation.

The US attorney for the Southern District of New York, Damian Williams, condemned Wahi's actions, saying that he "violated the trust placed in him by his employer by tipping others with valuable confidential information regarding Coinbase’s planned token listings."

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As blockchain technologies have evolved to enable ever-faster digital payments, the need for speed continues to drive both technological innovation and mainstream adoption of new digital assets. The sector is building a lot of momentum for obvious reasons—businesses have always wanted the ability to move money around faster, and individual consumers have become annoyed with waiting around for refunds. For many consumers and businesses experimenting with new digital assets, fast access to money has never felt more within reach.

This interest is not expected to cool, as younger generations become digital currency natives who only know of a world with digital wallets. But even for them, that future could remain out of reach because innovation in digital payments is slow. And that's not because we don't have the technology. According to many leading experts discussing fintech innovation at the Las Vegas conference Money 20/20 last month, the problem is that regulators have yet to set clear standards on what is and isn't allowed.

In the United States, the lack of regulatory clarity threatens to slow down not just mainstream adoption of new technologies but also innovation in digital payment options, potentially cutting off consumers and businesses nationwide from sought-after conveniences, simply because regulators can’t keep up with how digital assets are being used today.

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Last fall, scammers infiltrated social platforms like dating apps, WhatsApp, Facebook, and Twitter, attempting to convince people to download Coinbase Wallet. Once the targeted users downloaded the wallet, the scammer would then send links to fraudulent websites, prompting users to purchase a “voucher” that seemed like a safe transaction protected and facilitated by Coinbase’s trusted platform, but was “actually a malicious smart contract.” Horrified users eventually discovered the smart contract gave “the scammers complete access to the entire funds in the victim’s wallets” without requiring authorizations to withdraw funds.

Today, nearly 100 people from all over the globe are seeking to make the publicly traded Coinbase pay for allegedly doing nothing to protect users. Users alleged that Coinbase was unmoved by reports that scammers were draining accounts of tens or hundreds of thousands of dollars’ worth of cryptocurrency. In total, Coinbase Wallet users that are suing collectively lost $21 million.

For months, users allegedly warned the company of this seeming security flaw. Instead of acting to protect users, though, Coinbase “took no remedial steps to fix the security flaw or even warn customers about this major problem, despite warning customers about other security risks,” according to a recently filed arbitration demand . This allegedly allowed “hundreds” of additional users to become targets of “an easily preventable” liquidity mining pool scam.

Enlarge / Coinbase CEO Brian Armstrong speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California. (credit: Getty Images | Patrick T. Fallon )

Cryptocurrency exchange Coinbase is laying off 18 percent of its staff, the company announced today. The layoffs will cut 1,100 workers at the largest crypto exchange in the US, leaving it with about 5,000 employees, Coinbase said in a Securities and Exchange Commission filing .

"In the next hour every employee will receive an email from HR informing if you are affected or unaffected by this layoff," CEO Brian Armstrong wrote in a memo to staff that was posted on the company blog. Laid-off workers "will receive this notification in your personal email, because we made the decision to cut access to Coinbase systems for affected employees."

The immediate cutoff from Coinbase systems was necessary because of "the number of employees who have access to sensitive customer information," Armstrong wrote. This was "the only practical choice, to ensure not even a single person made a rash decision that harmed the business or themselves," he wrote.