A Collection of Ways to Lose Money in the Crypto World

Original author: Ada | Deep Tide TechFlow

After the massive sell-off on 10.11, the crypto market did not 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 no big deal. They've experienced much greater volatility, more devastating market shakeouts, and even deeper pitfalls. Those who have weathered the storms simply dismiss the market fluctuations 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 killed by 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 collapse

I'm Mike. I entered the industry in 2018 and am now an entrepreneur. I've experienced several bull and bear markets and made many mistakes along the way.

There were two particularly memorable losses.

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. At that time, I had just graduated from university, worked hard, lived in a partitioned room, and saved up 1.5 Bitcoins and 20 Ethereums. Just like that, it was all gone overnight. At the time, it didn't seem like a particularly large sum, but now it's worth millions.

Secondly, in 2020, I received a tip from a friend in the industry that a certain altcoin was going to be listed on Binance, so I bought in advance. In order not to waste 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.

Unexpectedly, after selling Bitcoin, it soared to $40,000, while the altcoin he had heavily invested in plummeted by 70%. Although the altcoin was later listed on Binance, it was too late.

I'm very cautious about rumors now because I don't know if they've already been priced in before they reach me, or if they're actually fake news.

Furthermore, the collapses of both Fcoin and FTX shocked many, highlighting the ever-present threat of black swan events in the crypto industry. Therefore, I now utilize cold wallets to mitigate extreme risks. Moreover, I don't allocate all my assets to the cryptocurrency market; I also hold stakes in US stocks, gold, and fiat currency deposits. Nothing in this world is 100% safe, and only through this diversification can I mitigate the impact of potential black swan events.

With more experience, I've developed my own logic for analyzing market trends and projects.

First, I look at where the liquidity is coming from. For example, this round of money came from the high-risk-appetite liquidity in the US dollar market, leading to an increasing 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 the project, mainly looking at the vision or intrinsic motivation of the team and founders.

Looking back, I would like to tell my younger self that I should be cautious and take things one step at a time, but I should also believe in the future of the industry and then be more courageous and daring in the right direction, such as investing in large-scale projects.

Finn: Hackers and Contracts, Lifelong Enemies

My name is Finn, and I am the founder of Agency BlockFocus, a cryptocurrency company.

I vaguely remember that on April 28, 2018, I deposited money on Huobi to buy Bitcoin for the first time. At that time, I didn't know what USDT was.

Back then, 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 intrigued. 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 did not stop me from entering the cryptocurrency world; instead, it opened a window for me. In early 2020, I had an opportunity to officially enter the cryptocurrency industry.

Having been in the cryptocurrency world for so many years, I have two major losses that leave the deepest impression on me. The first 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, which later became Aster, with a total value of approximately $600,000. If it hadn't been hacked, I would probably be financially independent by now.

Another incident happened on October 11th this year, the day of the major market correction. My 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 opened this account purely to gamble on luck, but I never expected the liquidation to be so precisely timed.

Besides these two instances, I also fell into a trap set by the project team once.

Last year I participated in a project whose initial valuation was less than 100 million yuan, but it reached a peak of 4 billion yuan when it opened this year. We were initially set on unlocking 10% of our TGE shares, but that hasn't happened yet. They said it would be postponed until next year, but no one knows exactly when. We negotiated with the project team for a refund, but that didn't work either. So I think investors are often quite vulnerable and helpless.

However, I have also set my sights on some projects, among which Aster is the most exciting to me.

Aster was formerly known as 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 also supported it with my actions. After my wallet was stolen, I continued to buy APX.

Why were you optimistic about it when it was still APX?

Firstly, I am 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 this was an internal Binance project, not an outsourced team or a project by someone who left the company. Binance has always been thorough in its work and will not allow internal projects to be abandoned. Therefore, I dared to bet on it in its early stages.

These past few years have been a rollercoaster of profits and losses, 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 good work-life balance. My hopes for the future are to work hard, avoid contracts, and ski more.

Beyond: Hacked by North Korean hackers

I am Beyond, and on Twitter people call me the Deconstructor. I first came into contact with cryptocurrency in 2021 when I was a freshman in college.

I remember April 20, 2021 clearly. That day, I saw some videos claiming that Dogecoin was about to break through $1, and there were all kinds of screenshots of profits posted online. These made me a little emotional, so I deposited 10,000 yuan to open a contract, but I was liquidated that night.

Although 10,000 yuan doesn't seem like a lot now, it represented several months' worth of living expenses for me when I was 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. Inscriptions became incredibly popular then, and I got involved again, earning 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, including creating my own inscriptions, running a cryptocurrency mining studio, providing outsourced technical support for projects, and now being 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 cryptocurrency world for a long time, I inevitably encountered some pitfalls.

What impressed me most was on August 10th last year, when someone posing as an employee of a well-known VC sent me a private message, inviting me to join them. At the time, I felt that making money in the market was becoming increasingly difficult, and I wanted to find something else to do, so I started contacting them on Telegram.

We chatted for about two weeks, and it went quite well. I could find their information on well-known information platforms, and we had more than 20 mutual friends, including some well-known figures in the industry. All the information presented was very convincing, so I completely trusted them. When they sent me a Google Meeting invitation, I readily accepted.

But as soon as I entered the platform they provided and clicked the link, all my on-chain assets were wiped out, and all my profiteering accounts and Web2 social media accounts were also stolen. The losses were enormous. Later I learned that they were a North Korean hacking organization.

Another instance was when the paper wealth was not converted into cash.

When inscriptions were all the rage, many Bitcoin assets saw returns of 100x or 1000x, but only one on the Ethereum blockchain achieved that. I believed Ethereum would produce second, third, and even more inscription assets with returns of 100x or 1000x, so I followed this logic in my investment research and eventually discovered ETHI. ETHI later rose from 3 USDT to a high of 4000 USDT per coin, validating my investment logic and foresight. However, because I had faith in inscriptions and believed they could revolutionize asset issuance, I held onto them without realizing their value, ultimately watching them plummet to zero.

However, this experience gave me a glimpse into the incredible wealth-generating potential of the cryptocurrency world, indirectly prompting me to eventually delve deeper into this field and engage in related work. Furthermore, it reminded me to respect cycles; no narrative can truly last forever. Know when to take profits and run. The only thing truly worthy of faith is Bitcoin.

Looking back, if I hadn't entered the industry, I might have gone to a traditional fund, securities firm, or investment bank and worked in the traditional financial industry step by step. But compared with my former classmates, I still have a significant advantage in personal development, so I am very grateful for my choice back then and I am full of confidence in the future.

Chong Ge: Harvested by a group of acquaintances

I'm Chong Ge. Like many "veteran users of paid knowledge products," my introduction to cryptocurrencies came from Li Xiaolai's course "The Road to Financial Freedom." My first cryptocurrency investment wasn't Bitcoin, but EOS.

Before entering the cryptocurrency world, I had followed the "traditional path": I had 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 increase tenfold or even dozens of times in just half a month, or of course, it could go to zero. At that time, I was attracted to this game of adventure.

If we're talking about losing money in the crypto world, I've definitely lost a lot, but the deepest pitfall wasn't "market losses," but rather being caught in a trap set by acquaintances.

The biggest loss I remember most vividly wasn't from a particular blockchain or project, but from trusting someone, which then dragged down everyone 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 bring me to a scheme, and I would bring my own friends in; 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 loss cost me millions. I tried to remedy the situation afterward, communicating with the project team and seeking redress, but the final result was always the same:

The money is gone, and the favors can't be recovered; all that's left is a bellyful of disappointment.

After that, I set a very strict principle for myself: I would avoid bringing people along to invest, especially things that I hadn't even figured out 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 encountered many pitfalls, I definitely won't quit. Because this is a global game that doesn't require extensive social interaction to participate in. 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" dungeon.

I now have a relatively complete investment logic system, but what really worries me is not "whether I have a system", but whether I have done the necessary work according to my own logic; how much room for optimization there is in this system; and whether I can productize this system 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.