From Hacker Attacks to Insider Scams: A Showcase of Ways to Lose Money in the Crypto World

Author: Ada, Deep Tide TechFlow

After the massive purge on October 11, the crypto market didn’t see a retaliatory rebound. Instead, it continued to plummet in November—Bitcoin fell below the $90,000 mark, and Ethereum also dropped to around $2,800.

But for the seasoned veterans in crypto, none of this is a big deal. They’ve experienced bigger swings, survived more brutal purges, and even fallen into deeper traps. Those who have weathered many storms just shrug off the market with a casual, “This is nothing.”

However, when talking about the past, no one remains unmoved. Some have experienced exchange collapses, some got rekt by so-called insider info, some were taken out by “familiar faces”…

Let’s listen to their stories and see what unforgettable ways OGs in the crypto industry have lost money.

Mike: Hit Hard by Exchange Rug Pull

I’m Mike. I entered crypto in 2018, and I’m now an entrepreneur. I’ve been through several bull and bear cycles and have stepped into more than a few traps.

Two losses left a deep impression on me.

The first was in 2019. I was looking for high returns, so I put some of my BTC, ETF, and USDT into an exchange’s wealth management product because it offered higher expected returns than others. But a year later, the exchange collapsed and ran off with the funds. The exchange was called Fcoin, one of the pioneers of transaction mining. I had just graduated from college, was working hard, living in a partitioned room, and had painstakingly saved up 1.5 BTC and 20 ETH—all wiped out overnight. It didn’t seem like a huge amount then, 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 get listed on Binance, so I jumped in early. Not wanting to waste the precious insider info, I sold two BTC to go all-in on that altcoin—BTC was about $10,000 each at that time.

But after I sold BTC, it soared to $40,000, while the altcoin I went heavy on dropped 70%. Although the altcoin eventually did get listed on Binance, by then it was meaningless.

Now I’m very cautious about so-called insider tips, because I don’t know if the news has already been priced in by the time it reaches me—or worse, it might be completely fake.

Also, both the Fcoin and FTX collapses shocked a lot of people. Black swans can hit the crypto industry at any time, so I now use cold wallets to avoid extreme risks. I also never put all my assets in crypto—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 can you reduce the impact of future black swan events.

After all these experiences, I’ve developed my own logic for analyzing markets or projects.

First, I look at where the liquidity comes from. For instance, this round of money came from high-risk appetite liquidity in the USD market, which is why Bitcoin and US stocks have become increasingly correlated. Essentially, Bitcoin is at the forefront of risk-on liquidity. Next, I focus on a project’s long-term prospects, with particular attention to the team and founder’s vision or inner drive.

Looking back, what I’d like to tell my past self is: be cautious and take each step carefully, but also believe in the industry’s future. In the right direction—like holding BTC—be braver and more daring.

Finn: Hackers and Leverage, Lifelong Nemeses

I’m Finn, founder of the crypto agency BlockFocus.

I vaguely remember April 28, 2018—the first time I deposited money on Huobi and bought Bitcoin. I didn’t even know what USDT was back then.

I had read an article by Mi Meng quoting Chang Jia’s investment advice to a college student: buy Bitcoin and put it in a cold wallet—check back in five years. That drew me in. Later, I learned Chang Jia had started a project called Bytom, so I used BTC to buy USDT, then used USDT to buy BTM. But a month later, my BTM was down 80%, leaving me with only a couple thousand yuan.

But that first loss didn’t stop me from moving deeper into crypto—it actually opened a new door for me. In early 2020, I had the chance to formally enter the industry.

Over the years, I’ve had two big losses that stand out. The first was at the end of April 2022, when my security awareness wasn’t strong enough and my safeguards weren’t in place—my wallet got hacked. Most of what was stolen was APX tokens (later called Aster), totaling over $600,000. If it hadn’t been stolen, I could have been financially free by now.

The second was on October 11 of this year, during the massive purge—my leverage position got liquidated, right at the bottom, losing a lot of money. Honestly, I’m not a professional trader; I only opened that position as a gamble. I didn’t expect to get liquidated so precisely.

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

Last year, I participated in a project with a valuation of less than $100 million. When it launched this year, it peaked at $4 billion. Previously, we agreed on a 10% unlock at TGE, but it still hasn’t unlocked—they say it’ll be delayed until next year, but there’s no specific date. We tried to negotiate a refund with the team, but that didn’t work either. So oftentimes, investors are pretty powerless and helpless.

But I have picked some winning projects, and the one I’m most excited about is Aster.

Aster was previously called APX. I started supporting it at the end of 2021. It’s the only project I’ve recommended to all my friends, and I’ve backed it with real money. After my wallet was hacked, I kept buying more APX.

Why did I like it back when it was still APX?

First, I’m bullish on DEXs, and this project was undervalued at the time. Most importantly, after verifying from multiple sources, I learned it was an internal Binance project—not something outsourced or started by ex-employees. Binance always sees things through and doesn’t let internal projects become abandoned, so I dared to bet early.

Over the years, I’ve gone through cycles of gains and losses. It feels like a loop, but I still think this industry is more profitable than others, and I enjoy being here—work and life are balanced. As for the future, my goal is to work hard, avoid leverage, and ski more.

Beyond: Robbed by North Korean Hackers

I’m Beyond. On Twitter, people call me the Deconstructor. I first got into crypto in 2021, when I was still a college freshman.

April 20, 2021—I remember the date clearly. That day, I saw videos claiming Dogecoin would break $1, and people were posting profit screenshots everywhere. I got caught up in the hype, deposited 10,000 yuan, and opened a leveraged position—but it was liquidated that very night.

It doesn’t seem like much now, but for a college freshman, that was several months’ living expenses. I realized it was too hard to handle, so I stayed away until early 2023. That was when inscriptions went viral, so I jumped back in and made some gains. The financial allure convinced me to choose crypto as my main path after graduation.

I’ve tried many things in crypto—doing my own inscriptions, running an airdrop studio, providing outsourced tech services for projects, and now working as a KOL, running my own community and Binance Square. I love the freedom and good economic returns of this lifestyle.

But after enough time in crypto, it’s impossible not to fall into some traps.

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

After about two weeks, everything seemed legit. I even found their info on reputable platforms, and we had over 20 mutual friends—including some well-known figures in the space. All the info 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 their link, all my on-chain assets were wiped out, and all my airdrop accounts and Web2 social accounts were stolen. The loss was huge. Later, I learned it was a North Korean hacker group.

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

During the inscription craze, there were many 100x or even 1,000x tokens on the Bitcoin chain, but only one 100x token on Ethereum. I believed more 100x or 1,000x inscription assets would emerge on Ethereum, so I did my research and discovered ETHI. Later, ETHI went from 3u each to as high as 4,000u each, proving my investment logic and vision. But because I had faith in inscriptions and believed they could revolutionize asset issuance, I held on without selling—only to watch it crash to zero.

But that experience gave me a glimpse of the wild wealth effect in crypto and indirectly pushed me to go all-in in this space. It also reminded me to respect the cycle—no narrative lasts forever. Take profits while you can; the only thing truly worth believing in is Bitcoin.

Looking back, if I hadn’t entered crypto, I’d probably be working for a traditional fund, brokerage, or investment bank—living a conventional financial career. But compared to my old classmates, I have a significant edge in personal development, so I’m grateful for my choice and full of confidence for the future.

Chong Ge: Rekt by a “Familiar Faces” Scam

I’m Chong Ge. Like many “knowledge economy 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 crypto, I’d done the “traditional route”: trading stocks, buying funds, even dabbling in US equities. But one day I realized—after two or three years of hard work in stocks, a 50% gain felt great; yet on-chain, a random altcoin could do 10x or 100x in half a month—or go to zero. That’s when I got hooked on the game of risk.

When it comes to losses, I’ve definitely lost a lot in crypto, but my deepest pit wasn’t from “market losses”—it was from “familiar faces” scams.

My most painful loss wasn’t a particular chain or project, but because I trusted someone—and, in turn, let down those who trusted me.

In my first two or three years in crypto, everyone was more sentimental, especially people like me who are simple and value loyalty. A friend would bring me into a deal, then I’d bring my own friends. “Someone I know introduced me,” so everyone let their guard down. But these deals were almost always pyramid schemes or air coins dressed up as “projects,” “startups,” or “blockchains.” In the end, the project died, the money was gone, and relationships were ruined.

That loss cost me millions. I tried to make up for it, talked to the project team, tried to defend our rights—but the result was always the same:

The money’s gone, the relationships can’t be salvaged, and all that’s left is disappointment.

After that, I made a hard rule for myself: never bring others into investments if I can avoid it—especially things I haven’t fully figured out myself. Because if something goes wrong, you lose not just your own money, but also relationships, reputation, and emotional well-being—the cost is too high.

Despite all the pitfalls, I’ll never leave crypto. This is a global game you can play without heavy socializing. As long as you’re headed in the right direction, you can keep leveling up here. This is the lifestyle I like—not just a side quest you finish and log off from.

Now, I have a fairly complete investment logic system, but what really makes me anxious isn’t whether I have a system, but whether I’m putting in enough work according to my own logic; how much room there is for optimization; and whether I can productize this system to help more people.

In this space, everyone wants to influence you. Projects want you to believe their story; KOLs want you to follow their trades; all sorts of groups and social platforms want you swept away by emotion. But the real starting point is when you stop unconditionally believing any “authority,” build your own logic, and verify things for yourself. Before then, you’re just an NPC in someone else’s system. After that, you might finally become your own player.