A Showcase of Ways to Lose Money in the Crypto World
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A Showcase of Ways to Lose Money in the Crypto World
What are some memorable ways that seasoned crypto investors have lost money in the industry?
Navigating Web3 tides with focused insightsWritten by: Ada | TechFlow
After the massive purge on October 11, the crypto market did not experience a revenge rally. Instead, it continued to plummet throughout November, with Bitcoin falling below the $90,000 mark and Ethereum dropping to around $2,800.
However, for seasoned crypto veterans, these moves are nothing out of the ordinary. They've endured greater volatility, survived harsher purges, and fallen into deeper traps. Those long tested by storms respond to market swings with a mere nonchalant "So what?"
Yet, when reflecting on the past, no one remains unmoved—some have lived through exchange collapses, others were scammed by so-called insider tips, and some were wiped out by schemes orchestrated by people they knew...
Let’s hear their stories and explore the most memorable ways veteran investors have lost money in the crypto industry.
Mike: Hit Hard by an Exchange Exit Scam
I'm Mike, entered the space in 2018, now an entrepreneur who has lived through multiple bull and bear cycles and fallen into many traps.
I’ve had two particularly memorable losses.
The first was in 2019, when I sought higher returns and deposited part of my BTC, ETF, and USDT into an exchange for yield farming because it offered higher expected returns than other platforms. A year later, the exchange collapsed and vanished. That exchange was Fcoin, one of the pioneers of transaction mining. Back then, I had just graduated from university, working hard, living in subdivided housing, and had saved 1.5 BTC and 20 ETH—an amount that seemed modest at the time but is now worth millions.
The second was in 2020. I received a tip from an industry friend that a certain altcoin would be listed on Binance, so I positioned myself early. To honor this precious inside information, I sold two BTC to go all-in on the altcoin, when each BTC was worth about $10,000.
But after selling, Bitcoin surged to $40,000, while the altcoin I heavily invested in dropped 70%. Although the coin eventually got listed on Binance, it was meaningless by then.
Now I’m extremely cautious about rumors, as I don’t know whether such information has already been priced in—or worse, if it's fabricated altogether.
Besides, shocks like Fcoin and FTX taught many a harsh lesson. Black swans can happen anytime in crypto, so I now use cold wallets to avoid extreme risks. I also diversify beyond crypto—allocating assets to U.S. stocks, gold, fiat deposits—because nothing is 100% safe. Only through diversified risk management can we reduce the potential impact of future black swan events.
With experience, I’ve developed my own logic for analyzing markets and projects.
First, I examine where liquidity originates. For example, in this cycle, capital flows came from high-risk appetite in the U.S. dollar market, increasing Bitcoin’s correlation with U.S. equities. Essentially, Bitcoin sits at the forefront of liquidity-driven risk appetite. Second, I focus on a project’s long-term trend, primarily evaluating the team and founder’s vision and intrinsic motivation.
Looking back, I’d tell my younger self: proceed cautiously and methodically, but believe in the industry’s future—and then be more courageous and bold in accumulating core assets like Bitcoin.
Finn: Hackers and Derivatives—My Lifelong Foes
I'm Finn, founder of BlockFocus, a crypto-focused agency.
I still remember April 28, 2018—the day I first topped up my account on Huobi and bought Bitcoin, not even knowing what USDT was.
Back then, I read an article by Mimi Meng featuring Longhair’s investment advice to a college student: buy Bitcoin and store it in a cold wallet for five years. I was instantly intrigued. Later, I learned Longhair launched a project called Bytom, so I used Bitcoin to buy USDT and then purchased BTM. But within a month, my BTM lost 80%, leaving me with just over 2,000 yuan.
That initial loss didn’t stop me—it opened a door. In early 2020, I got the chance to work in crypto full-time.
Over the years, I’ve had two major losses. The first was at the end of April 2022. Due to weak security awareness and inadequate precautions, my wallet was hacked. Most of what was stolen was APX tokens, later rebranded as Aster, totaling over $600,000. Had I not been hacked, I might have achieved financial freedom by now.
The second was during the October 11 purge this year—my futures position was liquidated at the lowest price point, causing heavy losses. Honestly, I’m not a professional trader; I was just gambling on luck, yet somehow managed to get liquidated with perfect precision.
Besides these, I once fell into a project trap.
Last year, I participated in a project valued at less than $100 million. This year, it peaked at $4 billion at launch. We originally agreed to unlock 10% at TGE, but it hasn’t happened yet—they pushed it to next year, without specifying a date. When I asked for a refund, they refused. So investors often feel powerless and helpless.
Still, I’ve also backed some winning projects, the most exciting being Aster.
Aster originated as APX. I started advocating for it in late 2021—it’s the only project I actively recommended to friends, and I supported it with real investments. After my wallet was hacked, I gradually repurchased APX.
Why did I believe in it when it was still APX?
First, I strongly believed in the DEX sector. The project had a low valuation, and crucially, I verified through multiple sources that it was an internal Binance project—not outsourced or led by former employees. Binance tends to finish what they start and wouldn’t let an internal project fail, so I felt confident betting early.
These years have been a rollercoaster of gains and losses, almost like a loop. But I still think this industry offers better earning potential than others, and being in the space feels comfortable—a community where I achieve balance between work and life. My hope for the future? Work hard, touch derivatives less, and ski more.
Beyond: Visited by North Korean Hackers
I'm Beyond, known on Twitter as “Jiegou Shi.” I first encountered cryptocurrency in 2021, during my freshman year.
April 20, 2021—I remember that date clearly. I saw videos claiming Dogecoin would break $1, flooded with screenshots of profits online. Emotionally charged, I deposited 10,000 yuan into a derivatives contract, only to get liquidated that same night.
While 10,000 yuan isn’t much today, it was several months’ worth of living expenses for a freshman. I realized how difficult it was to master, so I stayed away—until early 2023. When inscriptions went viral, I jumped back in and made some profits. Drawn by its financial appeal, I decided to make crypto my primary career path post-graduation.
I’ve tried various ventures in crypto: creating inscriptions, running a points-farming studio, providing technical outsourcing for projects, and now operating as a KOL managing my own community and Binance Square. I love this lifestyle—offering both freedom and solid financial returns.
But staying in crypto long enough inevitably means falling into some traps.
The deepest one was on August 10 last year. Someone impersonating an employee from a well-known VC messaged me privately, inviting me to join them. At the time, I felt it was getting harder to profit in the market and wanted to explore new opportunities, so I started communicating with them on Telegram.
We chatted for about two weeks. Everything seemed legit—I verified their info on reputable platforms, and we shared over 20 mutual connections, including some prominent figures in the space. All signs pointed to authenticity, so I fully trusted them. When they sent a Google Meeting invite, I accepted without hesitation.
But the moment I clicked the link on their platform, all my on-chain assets were drained. My farming accounts and Web2 social media profiles were also compromised. The loss was devastating. Later, I discovered they were a North Korean hacking group.
Another costly mistake was failing to cash out paper profits.
During the inscription boom, Bitcoin’s chain saw many 100x or even 1000x assets, while Ethereum only produced one 100x. I believed Ethereum could generate more breakout inscription assets—“Dragon No. 2,” “No. 3,” and beyond—so I followed this logic to research and eventually found ETHI. It later surged from 3u to 4,000u per piece, proving my thesis right. But due to my belief in inscriptions—that they could revolutionize asset issuance—I held on without selling. Then I watched helplessly as it crashed all the way to zero.
This experience gave me a glimpse of crypto’s insane wealth-creation power, indirectly pushing me to dive deeper into the industry. It also reminded me to respect market cycles—no narrative lasts forever. Take profits when appropriate. The only thing truly worth believing in is Bitcoin.
Looking back, without entering crypto, I might have pursued a conventional path—working at a traditional fund, securities firm, or investment bank. Compared to my peers now, I clearly have a significant edge in personal development. I’m grateful for my choice and remain confident about the future.
Brother Chong: Reaped by a Trusted Circle
I'm Brother Chong. Like many “longtime knowledge-pay users,” my crypto awakening came from Li Xiaolai’s course “The Road to Financial Freedom.” My first crypto investment wasn’t Bitcoin—it was EOS.
Before entering crypto, I followed the “traditional path”: trading stocks, buying funds, investing in U.S. equities. But one day, I noticed that a stock I’d held diligently for two or three years felt like a win at just 50% gain, while a single altcoin on-chain could multiply tenfold or even a hundredfold in half a month—though it could also go to zero. I was hooked by this game of risk and reward.
Talking about losing money in crypto, I’ve certainly lost plenty. But my deepest wound wasn’t from “market losses”—it was from a scam run by people I knew.
My most painful loss wasn’t tied to any chain or project—it stemmed from trusting a person, which then dragged down those who trusted me.
In my first few years in crypto, everyone placed heavy emphasis on “emotions” and relationships. Especially someone like me—simple-minded and loyal. A friend invited me into a scheme, and I brought my own friends along. Everyone thought, “It’s introduced by someone close,” so they let their guard down. But nine times out of ten, these setups are just Ponzi coins or empty shells disguised as “projects,” “startups,” or “blockchain ventures.” In the end, the project died, the money vanished, and relationships were destroyed.
This loss cost me millions. I tried to recover—contacting the team, seeking legal recourse—but the outcome was always the same:
The money never came back. The trust never returned. Just endless disappointment.
After that, I set a strict rule for myself: never bring others into investments, especially in things I don’t fully understand. Because if things go wrong, you’re not just losing your own money—you’re damaging relationships, credibility, and emotions. The cost is too high.
Despite all the pitfalls, I won’t leave the space. This is a global game that doesn’t require extensive networking. As long as you move in the right direction, you can level up repeatedly. It’s a lifestyle I enjoy—not just a dungeon to clear and exit.
Today, I have a relatively complete investment framework. But what truly worries me isn’t “whether I have a system,” but whether I’ve done enough work according to my own logic; how much room there is to optimize this system; and whether I can productize it to serve more people.
In this space, everyone wants to influence you. Project teams want you to believe their stories. KOLs want you to follow their trades. Groups and social channels want to manipulate your emotions. But the real starting point comes when you stop unconditionally trusting any “authority,” begin building your own logic, and learn to verify and reason independently. Until then, you’re just an NPC in someone else’s system. After that, you might finally become a player in your own game.
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