A Collection of Ways to Lose Money in the Crypto World

Author: Ada, Deep Tide TechFlow

After the massive sell-off on October 11th, the crypto market didn't see a retaliatory rebound. Instead, it continued to plummet in November, with Bitcoin falling below the $90,000 mark and Ethereum dropping to around $2,800.

But for seasoned crypto investors, these are nothing. They've experienced even greater volatility, more devastating sell-offs, and even deeper pitfalls. Those who have weathered the storms simply dismiss the market with a nonchalant, "What's the big deal?"

However, when talking about the past, no one is unmoved. Some have experienced exchange collapses, some have been fleeced by so-called insider information, and some have been ripped off by schemes involving acquaintances… Let's listen to their stories and see what memorable ways veteran investors have lost money in the crypto industry. Mike: Hit Hard by Exchange Collapses I'm Mike, I entered the crypto world in 2018 and am now an entrepreneur. I've experienced several bull and bear markets and fallen into many traps. I have two particularly memorable losses. First, in 2019, wanting to pursue higher returns, I put a portion of my BTC, ETF, and USDT into an exchange for investment, because it offered higher expected returns than other exchanges. However, a year later, the exchange collapsed and ran away with my money. The exchange was called Fcoin, one of the pioneers of transaction mining. I had just graduated from university, worked hard, lived in a partitioned room, and saved up 1.5 Bitcoins and 20 Ethereums, which vanished overnight. At the time, it didn't seem like a particularly large sum, but now it's worth millions. Second, in 2020, I got a tip from an industry friend that a certain altcoin was going to be listed on Binance, so I preemptively invested. To make the most of this valuable insider information, I sold two Bitcoins and went all in on this altcoin. At that time, one Bitcoin was worth about $10,000. As a result, unexpectedly, after selling Bitcoin, it surged to $40,000, while the altcoin I had heavily invested in plummeted by 70%. Although this altcoin was later listed on Binance, it was too late. Now I'm very cautious about rumors because I don't know if they've already been priced in before they reach me, or if they're simply false information. Furthermore, the collapses of both Fcoin and FTX shocked many people. The crypto industry is always vulnerable to black swan events, so I now also use cold wallets to mitigate extreme risks. And I don't put all my assets in the cryptocurrency market; I also have holdings in US stocks, gold, fiat currency deposits, and other assets. There's no such thing as 100% security in this world; only by diversifying risk can I reduce the impact of potential black swan events in the future. With more experience, I've developed my own logic for analyzing market trends and projects. First, I look at where the liquidity comes from. For example, this round of money came from the high-risk-appetite liquidity of the US dollar market, leading to a greater correlation between Bitcoin and the US stock market. Essentially, Bitcoin is at the forefront of liquidity risk appetite. Second, I focus on the long-term trend of projects, primarily looking at the team and founders' vision and intrinsic motivation. Looking back, I want to tell my younger self: be cautious, proceed step by step, but also believe in the future of the industry, and then be bolder and more daring in the right direction, such as accumulating Bitcoin. Finn: Hackers and Contracts, Lifelong Enemies My name is Finn, and I'm the founder of BlockFocus, an agency in the cryptocurrency world. I vaguely remember that on April 28, 2018, I deposited money on Huobi for the first time to buy Bitcoin. At that time, I didn't even know what USDT was. Around that time, I saw an article by Mi Meng where Chang Jia gave investment advice to a college student, suggesting buying Bitcoin and storing it in a cold wallet for five years before checking back. I was immediately attracted. Later, I learned that Chang Jia had created a project called Bytom, so I used Bitcoin to buy USDT, and then used USDT to buy BTM. However, a month later, my BTM had lost 80%, leaving me with only a little over two thousand yuan. However, my first investment failure didn't stop me from entering the cryptocurrency world; instead, it opened a window for me. In early 2020, I had an opportunity to officially work in the cryptocurrency industry. Having been in the cryptocurrency world for so many years, I have two major losses that stand out in my memory. One was at the end of April 2022, when my wallet was hacked due to insufficient security awareness and inadequate preventative measures. Most of what was stolen were APX tokens, later known as Aster, with a total value of approximately $600,000. If it hadn't been stolen, I would probably be financially independent by now. The other was on October 11th of this year, the day of the major market correction, when my futures contracts were liquidated, right at the lowest price point, resulting in a significant loss. To be honest, I'm not a full-time trader; I started this purely out of luck, but I never expected to be wiped out so precisely. Besides these two incidents, I also fell into a trap set by a project team. Last year, I participated in a project whose valuation was less than 100 million at the time, but reached a peak of 4 billion when it opened this year. We agreed to unlock 10% of our TGE holdings, but it hasn't unlocked yet. They said it would be postponed until next year, but no one knows exactly when. I negotiated with the project team for a refund, but it didn't work. So I think investors are often quite vulnerable and helpless. However, I've also had my eye on some projects, the one that excited me the most was Aster. Aster's predecessor was APX. I started promoting it at the end of 2021. It's the only project I've recommended to all my friends, and I've supported it with my actions. After my wallet was hacked, I continued to buy APX. Why was I optimistic about it when it was still APX? I think firstly, I'm very optimistic about the DEX sector, and this project had a very low valuation at the time. Most importantly, I verified from multiple sources that it was an internal Binance project, not an outsourced team or a project by someone who left the company. Binance is known for its thoroughness and wouldn't allow internal projects to be abandoned. So I dared to bet on it early on. These past few years have been a rollercoaster of ups and downs, seemingly caught in a cycle, but I still feel this industry is more lucrative than others, and I feel very comfortable within it. It's a circle that allows me to achieve a balance between work and life. My expectations for the future are to work hard, avoid contracts, and ski more. Beyond: Hacked by North Korean Hackers I am Beyond, known as the Deconstructor on Twitter. I first encountered cryptocurrency in 2021 when I was a freshman in college. On April 20, 2021, I clearly remember that day. I saw videos claiming Dogecoin was about to break $1, and there were various screenshots of profits circulating online. This got me a little carried away, so I deposited 10,000 yuan to open a futures trading account, but I was liquidated that very night. While 10,000 yuan doesn't seem like much now, it represented several months of my living expenses as a freshman in college. At the time, I felt it was too difficult to manage, so I didn't touch it again until early 2023. Inscription became popular then, and I got involved again and made some profits. Due to the financial incentive, I immediately decided to make the crypto industry my main career path after graduation. I've tried many businesses in the crypto world: creating my own inscriptions, running a freebie-collecting studio, providing outsourced technical support for projects, and now I'm a KOL, managing my own community and Binance Square. I enjoy this lifestyle that offers both ample freedom and decent financial rewards. However, after being in the crypto world for a while, I've inevitably encountered some pitfalls. The most memorable one was on August 10th last year, when someone posing as an employee of a well-known VC messaged me, inviting me to join them. At the time, I felt it was getting increasingly difficult to make money in the market and wanted to find something else to do, so I started contacting them on Telegram. I chatted with them for about two weeks, and it seemed to be going well. I could find their information on well-known information platforms, and we had over 20 mutual friends, including some well-known figures in the industry. All the information presented seemed very realistic, so I completely trusted them. When they sent me a Google Meeting invitation, I readily accepted. However, as soon as I entered their platform and clicked the link, all my on-chain assets were wiped out, and all my profit-seeking accounts and Web2 social media accounts were hacked. The losses were devastating. Later, I learned they were a North Korean hacking group. Another time, I was unable to liquidate my assets. When inscriptions were all the rage, many Bitcoin assets saw returns of 100x or 1000x, but only one on the Ethereum blockchain achieved 100x returns. I believed that Ethereum would produce second, third, and even more inscription assets with returns of 100x or 1000x, so I followed this logic and conducted research, eventually discovering ETHI. Later, ETHI rose from 3u per coin to a high of 4000u per coin, validating my investment logic and foresight. However, because I had faith in inscriptions at the time, believing they could revolutionize asset issuance, I held onto them without cashing out, ultimately watching them plummet to zero. This experience, however, gave me a glimpse into the incredible wealth-generating potential of the cryptocurrency world, indirectly driving me to eventually delve deeper into this field and engage in related work. Furthermore, this also reminds me to respect cycles. No narrative can truly last long; it's best to take profits when you can. The only thing truly worthy of faith is Bitcoin. Looking back, if I hadn't entered the crypto world, I might have gone to a traditional fund, securities firm, or investment bank, working a conventional job in the financial industry. However, compared to my former classmates, I have a significant advantage in personal development, so I'm grateful for my initial choice and full of confidence for the future. Chong Ge: Being Harvested by Acquaintances I am Chong Ge. Like many "veteran users of paid knowledge products," my crypto enlightenment came from Li Xiaolai's course "The Road to Financial Freedom." My first cryptocurrency investment wasn't Bitcoin, but EOS. Before entering the crypto world, I followed the "traditional path": I traded stocks, bought funds, and even invested in US stocks. But one day I realized that after painstakingly holding stocks for two or three years, a 50% increase felt pretty good; but an altcoin on the blockchain could multiply tenfold or even dozens of times in half a month, or it could go to zero. At that time, I was attracted to this game of adventure. To be honest, I've lost a lot of money in the crypto world, but the deepest pitfall wasn't "market losses," but rather being trapped by acquaintances. My most memorable big loss wasn't from a particular blockchain or project, but from trusting someone, which then dragged down everyone else who trusted me. In the first two or three years after entering this circle, everyone was quite "relationship-oriented," especially someone like me, with a simple personality and a strong sense of loyalty. A friend would introduce me to a scheme, and I would then bring in my own friends. Everyone felt "introduced by family," so they naturally lowered their guard. However, nine times out of ten, these schemes were disguised as "projects," "startups," or "blockchain," but were essentially pyramid schemes or worthless scams. In the end, the project failed, the money was gone, and relationships were damaged. This particular loss cost me millions. I tried to salvage the situation by communicating with the project team and seeking redress, but the final result was the same: the money was gone, the favors were lost, and all that remained was a deep sense of disappointment. After that, I set a very strict principle for myself: avoid bringing others into investments if possible, especially those I haven't fully understood myself. Because if something goes wrong, you not only lose yourself, but also damage relationships, reputation, and emotions—the costs are too high. Although I've made many mistakes, I definitely won't quit. Because this is a global game that doesn't require extensive social interaction. As long as you're on the right track, you can level up round after round. This is a lifestyle I prefer, not a "finish and log off" scenario. Now, I have a relatively complete investment logic system, but what truly worries me isn't "having a system," but whether I've done the necessary work according to my logic; how much room for optimization there is in this system; and whether I can productize it to serve more people. In this circle, everyone wants to influence you. Project teams want you to believe their stories; KOLs want you to follow them on their rides; various groups and social media platforms hope you'll be swayed by your emotions. But the real starting point is when you stop unconditionally believing any "authority," when you can build your own logic, and verify and deduce things for yourself. Before that, you're just an NPC in someone else's system. Only after that can you become your own player.