The market had been building toward collapse for months. Bitcoin fell from its 2021 peak of $69,000 to $16,000, kicking off the worst winter the industry had seen. OpenSea’s valuation tumbled about 90 percent. Terra/Luna imploded in May 2022—erasing more than $40 billion from the Terra ecosystem in 72 hours, wiping out retail investors worldwide. Three Arrows Capital, one of crypto’s largest hedge funds, collapsed shortly after. Then in November came the infamous fall of Sam Bankman-Fried’s exchange FTX, the industry’s golden child, undone in a week. He would ultimately be arrested and convicted of seven counts of fraud and conspiracy, stealing as much as $10 billion from customers. “Devin isn’t my first time advising one of the wonder kids,” Kuo says without elaborating.
As the company cratered and the NFT bubble burst, Kuo became what she calls Finzer’s “product mommy” and considers Finzer her “Build-A-Bear.”
Now they’re relaunching OpenSea as something that they claim is even more ambitious. “We tell normal people it’s an expansion,” she says, “but it’s the world”—explaining that the “normies,” those outside the crypto space, can’t yet fathom what technology will do to their lives in the next 5 to 10 years. “As the OGs are tired and quitting,” she says, “we feel more animated than ever.”
Not everyone shares the conviction. The more blockchain infrastructure matures, the harder it becomes to explain what OpenSea’s platform offers that trading venues like Coinbase or Gemini don’t. The projects that are succeeding have raised the bar— Hyperliquid and Uniswap, for example, now share revenue with token holders. Most tokens can’t compete with that model. The majority are issued primarily for governance purposes, giving holders a vote on protocol decisions but no direct stake in the company’s economics.
The demise of FTX not only sent the whole industry into free fall but ignited what the crypto world would come to call a witch hunt: a coordinated regulatory assault designed to strangle a technology its overseers didn’t understand and couldn’t control. Regulators saw it differently: The crypto world was the Wild West, and even if the rules weren’t perfect, at least it was a good start to protect American investors.
President Joe Biden had installed Gary Gensler—a former Goldman Sachs partner, MIT blockchain professor, and thus a man who understood crypto better than almost any other regulator—to chair the SEC with the ambition to bring the industry to heel. The central question was whether cryptocurrencies were securities or commodities. The answer determined everything: Securities fall under SEC jurisdiction, meaning exchanges and token issuers would need to register, disclose, and comply with investor protection rules designed for stocks, rules built for centralized institutions, not assets that could be sent and received anywhere on earth without a bank, a broker, or a border. Applying traditional financial forms of regulation to a technology that was at its core about self-sovereignty, privacy, anonymity, and breaking down global borders was destined to fail.
Described in the crypto world as “regulation by enforcement,” Gensler charged companies with violating securities laws and enforced a regulatory crackdown that squeezed crypto-friendly banks out of the system. “The SEC at the time was trying to sue crypto out of existence,” says Ryan, who recalls getting served with papers on Easter Sunday 2024 while setting the table for dinner. “I was the highest person at the Ethereum Foundation in the US,” he says plainly when I ask why he thought he was targeted.