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Crypto Horror Stories: 8 Events that Shook Crypto

Crypto Horror Stories: 8 Events that Shook Crypto

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In the spirit of the current crypto slump, we’ve decided to compile a list of some of the bigger crypto horror stories that have rocked the crypto community over the past ten years. For the most part, we are stuck with global tragedies over the individual.

Table of contents

Market crash after November 2021

According to a January 2021 Forbes article, the ten richest cryptocurrency moguls lost a total of $26.9 billion from November 2021, when Bitcoin and the entire crypto market peaked in value, to July 2022. At the time of this writing, three of the ten are worth 50% less than at the beginning of November.

The total market capitalization of all cryptocurrencies in cryptocurrencies was about $3 trillion on November 10, and on July 13, 2022 it was $883 million. While we don’t cry for billionaires who became millionaires, many smaller investors lost all their savings or even hundreds of thousands.

Axie Infinity Hack

On July 7, it was reported that North Korean hackers known as the Lazarus Group managed to steal $540 million worth of cryptocurrency from the Axie Infinity Platform through a phishing scam. Fortunately for the developers, players remained loyal and have continued to play the game. In addition, the developers were able to return $150 million to players, thanks to the support of their investors.

The May 2022 Luna-Terra crash

Terra (LUNA) was the name of an altcoin pegged to TerraUSD (UST) with a seigniorage algorithm intended to be a stablecoin with a 1:1 ratio to the USD. By doing so, UST was supposed to regulate LUNA so that it too would be exchanged for 1 UST for 1 USD worth of LUNA.

The problem with this though was that LUNA always recognized UST as 1 USD even when it wasn’t. This means that if UST were to drop to, say, $0.20, users could buy 50 UST for $10. They could then exchange their 50 UST for $50 of LUNA and then sell it on the open market for an instant profit of 500%.

This is exactly what happened on May 13, 2022, when the whale took advantage of the drop in UST price caused by Terraform’s self-driven $150 million wormhole pool in preparation for the launch of the 4pool platform. An opportunistic whale took advantage of the sudden drop in UST value to sell $350 million of UST from USDC’s Curve, resulting in an imbalance between UST 85% and 3CRV (15%), according to Forbes.

This led to a bank anchoring that led to a crash that caused a $200 billion drop in the overall cryptocurrency market cap in just a few days. An attempted solution, namely the TerraClassicUSD created by the Terra hard fork, has not fared much better, and as of July 13, 2022, each coin was worth around $0.04 USD, according to CoinMarketCap. Many people lost their savings as a result.

The day the founder died

QuadrigaCX

As old as crypto and less common today is when people lose their wallet’s private keys, either by accidentally throwing away their hard drive, forgetting their password, or something similar. But then there was the case of QuadrigaCX, where founder Gerald Corron died in December 2018 without leaving anyone the passwords to his laptop’s cold storage wallets, preventing over 110,000 Quadriga HODLers from ever gaining access. crypto again.

He had intended to set up a “Dead Man’s Switch” to broadcast shortly after his death, but had never gotten around to it. This resulted in a loss of approximately $200 million to these HODLers. This led to the company’s official bankruptcy in April 2019. Auts.

The Crypto Crash of 2018

2017 was arguably the year of the “crypto boom,” which saw the price of BTC rise nearly 20% year-to-date to an all-time high of $19,783 in December. But then the bubble burst. It continued to decline throughout 2018 until it dropped to $3,743 by December 2018.

While the HODLs that held during the long rollercoaster ride were fine, many new investors who had bought into BTC’s meteoric rise felt the pain almost immediately, especially if they had made the mistake of buying that all-important ATH. Within 5 days, the price had already dropped to $13,832.

Many people have different theories as to why this is, and University of Texas finance professor John Griffin, who specializes in fraud detection, is writing a paper detailing how this was due to deliberate price manipulation of Tether.

OneCoin Ponzi Scheme

OneCoin Ponzi Scheme

Confirmed professional con artist Ruja Ignatova somehow managed to run a long-running Ponzi scheme called “OneCoin” between 2014 and 2017 without arousing suspicion. That is, until he ran away after withdrawing $500 million in funds from the platform.

So far no trace of him or his family has been found. With crypto now worth around $4 billion, even the FBI has taken notice, offering a $100,000 reward to anyone who provides relevant information on his whereabouts.

The positive side of this crypto horror story is that it spawned a podcast, The Missing Crypto Queen. BBC presenter Jamie Bartlett tells the story of Ignatova’s greed and duplicity in trying to track her down.

2017 Ethereum Hack

Although the 2017 Ethereum hack was relatively minor compared to most of the events on this list, it resulted in a loss of approximately 153,000 ETH (equivalent to approximately $32.6 million at the time), as it was the first major hack on the Ethereum blockchain. . As with most hacks, an exploit was found between the Parity multi-signature wallet, which was then used to steal ETH.

This led to the community voting to implement a hard fork to return the blockchain to its pre-hack state. This is how a new blockchain called Ethereum Classic was born with its own coin ETC.

This was a choice; users voted to decide which fork branch to go with. For those who used ETC, their ETC would be equal to the amount of ETH they had before the fork. Unfortunately for those who chose Ethereum Classic over Ethereum, the platform never took off in the same way that Ethereum did. For example, on July 14, 2022, ETH was worth about 1,174 USD, while ETC was worth about 14.60 USD.

Mt. Gox hackers

Mt.  Gox hackers

2013 was a bad year for crypto HODLers when cryptocurrency exchange Mt. Gox, which once processed 70% of BTC transactions, was hacked multiple times for a total of 850,000 BTC (750,000 from customers and 850,000 MB from Gox itself). At that time they were worth 400 million dollars.

Unfortunately, only about 200,000 BTC have been recovered so far.

As this was the first major hack in crypto history, it is still remembered by many. This is especially true because it has evolved slowly. For example, a Russian hacker accused of laundering BTC was arrested only in 2017, and only in July 2022 was it announced that part of Mt. The cryptocurrency frozen in Gox’s accounts will be released back to its creditors.

Redditor’s Bad Ranks

In this thread, Redditors share the biggest losses they’ve suffered either from bad judgment or bad timing. From a user who lost $290,000 investing in Pixelated Whale to those who didn’t sell their crypto at the November 2011 ATH, it makes for a tragic read and a cautionary tale for future crypto traders.

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