Losses exceeding hundreds of millions, repeated defeats, forced exits... The prominent figures and star companies that failed in cryptocurrency
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Losses exceeding hundreds of millions, repeated defeats, forced exits... The prominent figures and star companies that failed in cryptocurrency
We hope industry leaders and prominent companies can recognize the industry landscape, abandon speculative mindsets, and rationally engage in the application and development of blockchain technology.
Navigating Web3 tides with focused insightsSource | Chain News
Author | Kong Liang
Editor | Yin Yue
Recently, news spread online claiming that Wang Ke, husband of actress Liu Tao, lost 1.2 billion yuan investing in cryptocurrencies. Both Liu Tao and Wang Ke have since denied the report.
One defining feature of cryptocurrency investment is "high risk, high return." While there are stories of coins multiplying in value hundreds or even thousands of times, there are also many well-known, well-funded, and influential figures who have ended up as victims.
Losses in the Billions: Zhang Zhenxin
Loss Severity: ★★★★★
On the evening of October 5, 2019, CreditEase Group issued a notice announcing that Mr. Zhang Zhenxin, chairman of Pioneer Group and actual controller of CreditEase Group, had passed away at the age of 48 due to multiple organ failure, alcohol dependence, and acute pancreatitis. He died on September 18, 2019, at Chelsea and Westminster Hospital in London.
Zhang Zhenxin, who achieved fame at a young age, stands as a typical example of a traditional financial tycoon defeated by blockchain.
According to public reports, the entire Pioneer Group empire once controlled by Zhang Zhenxin included over a hundred companies holding numerous financial licenses in banking, securities, insurance, and payments, with directly managed assets reaching as high as 300 billion yuan.
Riding the wave of internet finance, Pioneer Group enjoyed its golden era. As internet finance declined, Zhang Zhenxin, ever perceptive, began moving into blockchain in 2017, venturing into cryptocurrency exchanges, mining hardware, mining farms, and Bitcoin. After Bitcoin's sharp decline in 2018, the company sold off assets at low prices in an attempt to cut losses.
According to incomplete statistics from insiders at Pioneer Group, Zhang Zhenxin’s losses in blockchain ventures amounted to tens of billions of yuan.
Two Attempts, Two Failures: The British Baroness
Loss Severity: ★★★★
Michelle Mone, a Scottish lingerie magnate and member of parliament known as Baroness, has shown relentless determination in Bitcoin, yet both of her attempts ended in failure.
Michelle Mone's first cryptocurrency project lasted less than six months. In February 2018, she and partner Doug Barrowman launched an ICO named "Equi," aiming to raise $80 million. However, after changing commitments to bounty hunters, the project refunded investors by July.
In October 2018, the project invited Steve Wozniak, co-founder of Apple, to join in an attempt to revive it, but no further updates were ever released.
Undeterred by this initial failure, Michelle Mone later developed the Aston Plaza apartment project in Dubai worth $325 million, claiming units would be sold for Bitcoin. However, the project has been suspended since January 2019.
Master of Traditional Business, Not Bitcoin: Masayoshi Son
Loss Severity: ★★★
Masayoshi Son, founder of SoftBank Group, is well known in China for creating numerous internet investment legends, yet he suffered major losses in Bitcoin, losing $130 million.
According to The Wall Street Journal, Son invested in Bitcoin near its all-time high at the end of 2017, only to see prices plummet. Although the exact number of Bitcoins he purchased remains unknown, Son sold his holdings in early 2018, incurring losses exceeding $130 million.
Besides prominent individuals failing in blockchain, several notable companies also suffered heavy losses—or even abandoned their efforts altogether.
KYING Network Fully Exits Blockchain Business
Loss Severity: ★★★★★
The situation for A-share listed company KYING Network (SZ:002517) has been far from ideal. On May 22 this year, during an investor relations event, an investor asked: "How did the company's previous blockchain initiatives go? Has the company fully exited the blockchain business?"
KYING Network responded: "The company previously experimented and explored areas such as blockchain, but later clarified its strategy to focus deeply and strengthen its core gaming business. We will not make additional investments in fields that do not effectively support or synergize with our current gaming operations."
Indeed, KYING Network has made no further moves into the blockchain industry since then, leaving its blockchain division—once staffed by a team of a hundred technical experts founded by Ning Bingyang, a co-founder of Kugou Games—in an awkward position.
According to KYING Network’s 2019 annual report, the company expected to lose between 1.8 and 2.3 billion yuan for the year, compared to a profit of 170 million yuan the previous year.
2345: Fallen from Cash Loans, Dreams Shattered in Blockchain
Loss Severity: ★★★★
In June 2014, 2345 successfully reverse-listed on the Shenzhen Stock Exchange under the title of "China's first internet stock." At the same time, 2345 caught a highly profitable trend—internet finance.
With its "cash loan" product, 2345 briefly created a "miracle" of rapid growth. But following the release of the "Notice on Regulating and Rectifying Cash Loan Business" by the Internet Finance Risk Rectification Task Force and the P2P Online Lending Risk Rectification Task Force on December 1, 2017, 2345 decisively discontinued its high-interest cash loan products.
At the beginning of 2018, 2345, known for chasing trends, rushed into blockchain. It established 2345 (Shenzhen) Blockchain Technology Co., Ltd., released the "2345 Blockchain Solution White Paper 1.0," and announced the "2345 Planet Alliance Plan"—a platform based on blockchain technology designed to reward users for their online activities, boldly proclaiming: "Join the Planet Alliance and earn money just by going online."
But the good times didn’t last. Amid fierce skepticism and controversy, Han Meng, founder of 2345, realized the "mining game" was unsustainable and ultimately chose to abandon it. Whether it was the "Octopus Planet" device or the so-called blockchain Star Coin, these initiatives reflected 2345’s unclear understanding and poor execution of blockchain, sealing their inevitable failure.
Kodak Abandons Cryptocurrency, Turns to Pharmaceutical Production
Loss Severity: ★★★
On January 11 and 12, 2018, Kodak's U.S. stock price surged as much as 328.1% over two days, driven by its announcement of launching KodakOne—a photo rights management platform powered by blockchain technology—and introducing its own cryptocurrency, KODAKCoin, for use within the platform.
However, due to investor qualification verification issues, Kodak delayed its blockchain ICO. A report by Kerrisdale Capital claimed that Kodak’s blockchain and cryptocurrency plans were merely opportunistic and unreliable. Many blockchain and database experts, lawyers, and founders of digital content organizations expressed skepticism about Kodak’s blockchain initiative. The report also pointed out several vulnerabilities in Kodak’s copyright encryption approach.
It is reported that Kodak later sold one-third of its stake, and the cryptocurrency project quickly failed.
Now, this former giant of the film industry is turning to become a "pharma hero."
On May 14, 2020, in response to the coronavirus pandemic, President Trump signed an executive order to expand domestic production of strategic medical supplies. Shortly afterward, the U.S. government provided Kodak with a $765 million loan to support its transition into pharmaceutical manufacturing. Following this news, Kodak's stock surged 2,760% within a week.
While Kodak may have gained stock value and thus not incurred significant financial loss, its once-grand vision for blockchain has completely vanished.
Blockchain was the hottest tech buzzword starting in 2018, spawning countless industries jumping on the "blockchain+" bandwagon—some genuine, some fraudulent—leading many investors astray.
Only after the central government's "October 24" policy last year did blockchain technology reach a new level. Since then, leading Chinese internet companies and traditional financial institutions have entered the space, increasing certainty for real-world applications and making the industry's outlook clearer.
It is hoped that industry leaders and major companies can better understand the landscape, discard speculative mindsets, and rationally engage in the application and development of blockchain technology.
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