Sample Cases of Crypto Losses: A Map of Wealth Traps from Exchange Runaways to Hacker Attacks

Authors: Ada, Deep Tide TechFlow

Original Title: A Showcase of Losing Money in the Crypto World

After the massive shakeout on 10.11, the crypto market did not experience a retaliatory rebound. Instead, it continued to plunge in November, with bitcoin falling below the $90,000 mark and ethereum dropping to around $2,800.

But for seasoned crypto veterans, none of this is a big deal. They've weathered even greater volatility, survived more brutal purges, and fallen into deeper pits. For those who have been through the storms, the market is met with a casual, "This is nothing."

However, when talking about the past, no one remains unmoved. Some have experienced exchange collapses, some have been taken advantage of by so-called insider information, and some have been cut down by acquaintances...

Let’s listen to their stories and see what memorable ways the old hands in the crypto industry have lost money.

Mike: Hit Hard by Exchange Runaways

I’m Mike. I entered the crypto space in 2018 and am now an entrepreneur. I’ve been through several bull and bear cycles and have stepped on quite a few landmines.

There are two losses that left a deep impression on me.

The first was in 2019. I wanted to chase higher returns, so I put some of my BTC, ETF, and USDT into a certain exchange’s wealth management product, because it offered higher expected returns than other exchanges. But a year later, the exchange went bust and ran away. The exchange was called Fcoin, one of the pioneers of transaction mining. At that time, I had just graduated from college, was working hard, living in a partitioned room, and had managed to save 1.5 bitcoin and 20 ethereum. Overnight, it all went to zero. It didn’t seem like a huge amount at the time, but now it would be worth millions.

The second was in 2020. I got a tip from an industry friend that a certain altcoin was about to be listed on Binance, so I bought in early. Not wanting to waste this precious inside information, I sold two bitcoin and went all-in on this altcoin. At that time, one bitcoin was about $10,000.

As it turned out, after I sold the bitcoin, its price soared to $40,000, while the altcoin I heavily invested in dropped by 70%. Although the altcoin was eventually listed on Binance, it was already meaningless by then.

Now I’m very cautious about insider information, because I don’t know if it’s already been priced in by the time it reaches me, or if it’s simply fake news.

In addition, both the Fcoin and FTX collapses shocked many people. Black swan events can happen at any time in the crypto industry, so I now also use cold wallets to avoid extreme risks. I also don’t put all my assets in the crypto market—US stocks, gold, and fiat deposits are all part of my portfolio. There’s no such thing as 100% safety in this world; only by diversifying risk can you reduce the impact of future black swan events.

After so many experiences, I’ve developed my own logic for looking at the market or projects.

First, I look at where the liquidity comes from. For example, this round of money comes from the US dollar market’s high-risk appetite liquidity, which has led to an increasing correlation between bitcoin and the US stock market. Essentially, bitcoin is at the forefront of liquidity risk appetite. Second, I focus on the long-term trend of a project, mainly looking at the team and the founder’s vision or intrinsic motivation.

Looking back, I’d tell my younger self to be cautious and tread carefully, but also to believe in the industry’s future, and to be braver and bolder in the right direction, such as holding onto bitcoin.

Finn: Hackers and Contracts, Lifelong Foes

My name is Finn, founder of the crypto agency BlockFocus.

I vaguely remember April 28, 2018, when I first deposited money into Huobi to buy bitcoin. At the time, I didn’t even know what USDT was.

I saw an article by Mimeng where Chang Jia gave a college student investment advice: buy bitcoin and put it in a cold wallet, then check back in five years. I was intrigued. Later, I learned that Chang Jia had a project called Bytom, so I used bitcoin to buy USDT, then used USDT to buy BTM. But a month later, my BTM had lost 80% of its value, leaving me with just over 2,000 yuan.

But my first investment failure didn’t stop me from entering the crypto world. Instead, it opened a new door for me. In early 2020, I had the opportunity to officially work in crypto.

In all these years, two major losses stand out. The first was at the end of April 2022. Due to insufficient security awareness and inadequate precautions, my wallet was hacked. Most of the stolen assets were APX tokens, which later became Aster, with a total value of over $600,000. If they hadn’t been stolen, I’d probably be financially free by now.

The other was on October 11 this year, during the massive shakeout. My contract position was liquidated at the lowest price point, and I lost a lot of money. Honestly, I’m not a professional trader; I opened the position just to try my luck, but I didn’t expect to get liquidated so precisely.

Besides these two, I also fell into a project team’s trap once.

Last year, I participated in a project that was valued at less than 100 millions. When it launched this year, its peak valuation reached 4 billions. We had agreed on a 10% unlock at TGE, but it still hasn’t been unlocked, and they say it’ll be postponed to next year, but no specific date. We tried to negotiate a refund with the project team, but that didn’t work either. So I feel that investors are often quite weak and helpless.

But I’ve also spotted some good projects, and the one I’m most excited about is Aster.

Aster was formerly APX. I started promoting it at the end of 2021. It’s the only project I’ve recommended to all my friends, and I supported it with real action. After my wallet was hacked, I continued to buy APX.

Why was I bullish on it when it was still APX?

First, I’m optimistic about the DEX sector, and the project’s valuation was very low at the time. Most importantly, I verified from multiple sources that this was an internal Binance project, not something outsourced or started by ex-employees. Binance always finishes what it starts and doesn’t let internal projects become unfinished, so I dared to bet early.

Over the years, I’ve had ups and downs, and it feels like a cycle. But I still think this industry is easier to make money in than others, and I feel comfortable staying in the circle. It’s a space where I can balance work and life. As for the future, I hope to work hard, avoid contracts, and go skiing more.

Beyond: Visited by North Korean Hackers

I’m Beyond, known as the Deconstructor on Twitter. I first got into crypto in 2021, when I was a freshman in college.

April 20, 2021, is a date I remember clearly. That day, I saw some videos claiming that dogecoin was about to break $1, with all sorts of profit screenshots online. I got caught up in the hype, deposited 10,000 yuan, and opened a contract position, but got liquidated that very night.

Looking back, 10,000 yuan isn’t much, but for a freshman, it was several months’ living expenses. I felt it was too hard to handle, so I stayed away until early 2023. When inscriptions became popular, I got involved again and made some profits. The financial lure made me decide to make crypto my main career after graduation.

I’ve tried many things in crypto: creating inscriptions, running an airdrop farming studio, providing outsourced tech services for projects, and now becoming a KOL, running my own community and Binance Square. I like this lifestyle that offers both freedom and decent financial returns.

But after spending a long time in crypto, it’s inevitable to step on some landmines.

The most memorable was on August 10 last year. Someone posing as an employee of a well-known VC messaged me, inviting me to join them. I felt it was getting harder to make money in the market and wanted to try something else, so I started chatting with them on Telegram.

After about two weeks, everything seemed fine. I found their info on reputable platforms, and we had over 20 mutual friends, including some well-known figures in the space. All the information looked very convincing, so I fully trusted them. When they sent a Google Meeting invite, I gladly accepted.

But as soon as I entered their platform and clicked the link, all my on-chain assets were wiped out. All my airdrop farming accounts and Web2 social accounts were also stolen. The losses were huge. I later learned they were a North Korean hacker group.

There was another time when I failed to cash out my paper profits.

During the inscription craze, there were many tokens on the bitcoin chain that multiplied hundreds or thousands of times, but only one such token appeared on the ethereum chain. I believed more would emerge, so I did my research and discovered ETHI. Later, ETHI rose from $3 to $4,000 per token, proving my investment logic and vision. But because I believed in inscriptions and thought they could revolutionize asset issuance, I held on and didn’t cash out, only to watch it drop all the way to zero.

But this experience gave me a glimpse of the crazy wealth effect in crypto and indirectly pushed me to go deeper into the space for related work. It also reminded me to respect the cycle—no narrative lasts forever. Take profits when you can; the only thing truly worth believing in is bitcoin.

Looking back, if I hadn’t entered crypto, I might have gone into traditional funds, brokerages, or investment banks, working a conventional finance job. But compared to my former classmates, I now have a significant advantage in personal development, so I’m grateful for my choice and confident about the future.

Chong Ge: Harvested by Acquaintances

I’m Chong Ge. Like many “knowledge-paying veterans,” my crypto enlightenment came from Li Xiaolai’s course “The Road to Financial Freedom.” My first crypto investment wasn’t bitcoin, but EOS.

Before entering crypto, I followed the “traditional path”: trading stocks, buying funds, and even US stocks. But one day I realized that after holding stocks for two or three years, a 50% gain felt pretty good; but a random altcoin on-chain could multiply ten or even dozens of times in just half a month—or go to zero. I was drawn to this adventurer’s game.

When it comes to losing money in crypto, I’ve certainly lost my fair share, but the deepest pit wasn’t “market losses,” but being caught in an acquaintance’s scheme.

The most memorable big loss wasn’t from a particular chain or project, but from trusting someone—and dragging others who trusted me into it.

In my first two or three years in crypto, everyone was still “emotionally invested,” especially people like me, who are simple and value loyalty. A friend would bring me into a deal, and I’d bring my own friends in. Since it was “introduced by someone you know,” everyone would let their guard down. But nine times out of ten, these deals were just disguised as “projects,” “startups,” or “blockchain,” but were essentially pyramid schemes or vaporware. In the end, the project died, the money was gone, and relationships were damaged.

This loss cost me several millions. I tried to make up for it, contacted the project team, and defended my rights, but the outcome was always the same:

The money couldn’t be recovered, nor could the goodwill—only disappointment remained.

After this, I set a hard rule for myself: never bring others into investments if I can help it, especially if I haven’t fully figured it out myself. Because if something goes wrong, you’re not just losing your own money—you’re also risking relationships, reputation, and emotions. The cost is too high.

Although I’ve stepped on many landmines, I definitely won’t leave the space. This is a global game you can participate in without heavy socializing. As long as you’re heading in the right direction, you can level up round after round. This is the lifestyle I enjoy, not just a “one-off mission.”

Now, I have a relatively complete investment logic system. But what really makes me anxious isn’t whether I have a system, but whether I’ve done enough work according to my logic; how much room there is for optimization; and whether I can productize this system to serve more people.

In this space, everyone wants to influence you. Project teams want you to believe their story; KOLs want you to follow their trades; various groups and social channels want you to be swept up by emotions. But the real starting point is when you stop unconditionally believing any “authority” and start building your own logic, verifying and deducing for yourself. Before that, you’re just an NPC in someone else’s system. After that, you might finally become your own player.