Crypto & Web3 Failures: $100B+ Destroyed
Analysis of cryptocurrency and Web3 project failures. From FTX to Terra/Luna — fraud, speculation, and the crypto winter graveyard.
12+
Failed
$113B
Lost
95%
Fail Rate
2.3 years
Avg to Fail
Failure Reasons in This Industry
Common Failure Patterns
Fraud & Ponzi Economics
From FTX to Terra/Luna, many crypto projects relied on circular token economics that were effectively Ponzi schemes.
Regulatory Crackdowns
SEC enforcement, global regulatory tightening, and banking partner withdrawals killed many crypto businesses overnight.
Speculative Demand Only
Most crypto projects had no real utility beyond speculation. When prices dropped, users disappeared and the flywheel reversed.
Failed Startups (12)
Terra/Luna
Algorithmic Stablecoin Collapse · Algorithmic stablecoins are inherently fragile. When confidence breaks, the deat…
$207M
2018–2022
FTX
Fraud & Mismanagement · Due diligence on founder character is as important as business metrics. Lack of …
$1.8B
2019–2022
Three Arrows Capital
Excessive Leverage · Concentrated, leveraged bets in volatile markets with borrowed funds create casc…
$0 (hedge fund)
2012–2022
Celsius Network
Ponzi-Like Structure & Insolvency · Crypto yield platforms offering 17% APY are unsustainable. When yields come from…
$750M
2017–2022
Genesis Global
Counterparty Losses & Contagion · Crypto prime brokerage with $3B in outstanding loans collapses when multiple bor…
$0 (DCG subsidiary)
2013–2023
BlockFi
Counterparty Risk & Contagion · Crypto yield products are just unsecured lending with extreme counterparty risk.…
$1B
2017–2022
Celsius Mining
Parent Company Insolvency · Using customer deposits to fund Bitcoin mining operations is reckless and possib…
$750M
2021–2022
Core Scientific
Energy Costs & Bitcoin Price Crash · Bitcoin mining companies are leveraged bets on crypto prices and energy costs — …
$600M
2017–2022
Diem (Meta/Facebook)
Regulatory Opposition · Even Facebook (Meta) with billions in resources couldn't launch a cryptocurrency…
$0 (Meta-funded)
2019–2022
FTX US
Parent Company Fraud Contagion · Even a supposedly "separate" US subsidiary collapses when the parent company com…
$400M
2020–2022
Voyager Digital
Three Arrows Capital Contagion · Lending $660M to a single borrower (Three Arrows Capital) without collateral is …
$100M
2018–2022
Hodlnaut
Terra/Luna Losses & Fraud · Small crypto lending platforms offering 7%+ yields on stablecoins were all expos…
$40M
2019–2022
How to Succeed in This Industry
- ✓Build real utility beyond speculation — if your product only works when token prices go up, it's fragile
- ✓Embrace regulation proactively — compliant projects survive regulatory cycles
- ✓Focus on infrastructure and tools rather than consumer-facing tokens
- ✓Maintain transparent reserves and regular audits to build institutional trust
Frequently Asked Questions
What percentage of crypto projects fail?
Over 95% of cryptocurrency projects fail or become effectively worthless. CoinGecko data shows that over 14,000 cryptocurrencies have been delisted or abandoned. The failure rate is the highest of any startup category.
What was the biggest crypto failure?
Terra/Luna's collapse in May 2022 destroyed $60B+ in value in a single week, making it the largest single-event wealth destruction in crypto history. FTX ($32B) is the largest exchange failure.
Why do Web3 startups fail?
Web3 startups fail because: (1) speculative demand masks lack of real utility, (2) token economics create unsustainable growth loops, (3) regulatory uncertainty makes institutional adoption impossible, and (4) user experience remains too complex for mainstream adoption.
Are there any successful crypto startups?
Coinbase (publicly traded), Circle (USDC stablecoin), and Chainalysis (blockchain analytics) are notable survivors. They succeed by providing infrastructure and compliance tools rather than speculative tokens.