The Biggest Crypto Collapses in the History of Cryptocurrency
/ The Biggest Crypto Collapses.-The cryptocurrency market experienced a series of collapses, including Mt. Gox, BitConnect, Luna/Terra, Voyager.
Author: Nilesh Hembade.
Updated: 01 Dec 2023.
In the thrilling world of cryptocurrency, where fortunes are made and lost overnight, some stories stand out not for their successes but for their dramatic collapses. Let’s take a ride through the turbulent history of notable crypto failures, reminding us all that the digital frontier is not without its pitfalls.
1. Mt. Gox: The Tokyo Tragedy
In the bustling world of Bitcoin exchanges, Mt. Gox once stood tall. Based in Tokyo, it quickly rose to prominence, handling a significant chunk of Bitcoin trading globally. However, the year 2014 brought turmoil. Mt. Gox faced technical difficulties, citing security concerns and halting all Bitcoin withdrawals. The shocking revelation followed—a colossal security breach led to the theft of a staggering 850,000 Bitcoins, leaving the exchange and its users devastated.
2. BitConnect: The Promise of Profits
BitConnect entered the scene as a cryptocurrency lending and exchange platform, luring investors with promises of lucrative returns. Operating from 2016 to 2018, it boasted its native cryptocurrency, BitConnect Coin (BCC). However, suspicions of running a Ponzi scheme loomed large. The inevitable day arrived in 2018 when BitConnect shut down, leaving investors in disbelief and estimated losses totaling a staggering $2.6 billion.
3. Luna/Terra: Market Shivers and Legal Woes
The already volatile cryptocurrency market faced a seismic event with the collapse of Luna. This debacle, believed to have tanked Bitcoin prices and wiped out $300 billion in cryptocurrency market value, resulted in legal repercussions. In September 2022, Do Kwon, a key figure associated with Terraform Labs’ LUNA and UST coins, faced an arrest order, highlighting the legal fallout from crypto collapses.
4. FTX: The Sudden Plunge
In a shocking turn of events in late 2022, FTX, a prominent Bahamas-based cryptocurrency exchange, faced a swift and severe collapse. Founded by Sam Banksman-Fried, FTX’s downfall initiated its liquidation. The trigger? FTX’s own token, FTT, encountered a liquidity crisis, leading to a cascading failure. The aftermath revealed a $8.9 billion deficit in customer funds, leaving over a million members in disbelief.
5. Voyager Digital: The Missed Payment
Voyager Digital, a well-known cryptocurrency investment company, found itself in dire straits after cryptocurrency hedge fund 3AC missed a hefty $650 million payment. Voyager, having provided a substantial loan to 3AC with no collateral, declared bankruptcy in July 2022. With debts estimated between $1 billion and $10 billion, Voyager’s fall from grace underscored the risks associated with financial dealings in the crypto world.
6. BlockFi: Following the FTX Fallout
Following the shockwaves from FTX’s collapse, another cryptocurrency exchange, BlockFi, filed for Chapter 11 bankruptcy in November 2022. Boasting approximately 100,000 creditors and assets and liabilities ranging between $1 billion and $10 billion, BlockFi’s fate was intertwined with the events surrounding FTX, emphasizing the interconnectedness of the crypto ecosystem.
7. Celsius: Withdrawals Amid Uncertainty
As concerns mounted about the Celsius network’s ability to repay crypto investments, a wave of withdrawals ensued. Investors, fearing losses, began converting their holdings to cash and other stable assets. The domino effect culminated in Celsius filing for bankruptcy on July 13, 2022, marking another chapter in the ongoing saga of crypto collapses.
These tales of triumph turned tragedy serve as cautionary reminders of the inherent risks in the cryptocurrency landscape. Security vulnerabilities, fraudulent schemes, and mismanagement cast a shadow over the potential for financial gains. As we navigate this digital frontier, let these narratives be a guide, urging us to approach the crypto rollercoaster with due diligence, thorough research, and a discerning eye for reputable platforms.