The crypto assets (also known as virtual currencies) industry has seen a series of major incidents over the years, from large-scale thefts to corporate collapses. Some of these events caused damage in the hundreds of millions to billions of dollars, leaving many users with permanent losses. While these are past events, the underlying causes can resurface in new forms, so the risk of similar incidents happening again is never zero.

This article walks through some of the most notable incidents in crypto assets, summarizing what happened and the background behind each. Understanding what went wrong in the past can help you think more clearly about how to assess similar risks going forward.

Types of Major Incidents in Crypto Assets

At first glance, each crypto-related incident may look unique, but most fall into a handful of recurring patterns. Looking at where the underlying problem originated makes it much easier to see the bigger picture.

The three most common categories are:

  • Failures in an exchange's security or operational controls (unauthorized outflows, hacking, etc.)
  • Misconduct by the operator itself (misuse of customer assets, poor asset management)
  • Investment scams promising high returns (Ponzi schemes, etc.)

For example, when the problem lies in an exchange's security controls, users can lose their assets through no fault of their own. On the other hand, in schemes disguised as investments, victims are often drawn in by promises that their money will grow, and end up depositing funds voluntarily—only to lose them.

In other words, even though these are all described as “crypto trouble,” the root causes and mechanisms can differ significantly. Understanding this classification in advance makes it easier to recognize where risk is likely to appear.

Notable Crypto Incidents: Case Studies

Learning about crypto asset risks is much easier when grounded in real events. Several past incidents caused massive losses, with many users losing their holdings entirely.

Below are some of the most well-known cases, along with their key characteristics and background.

The Mt. Gox Incident (Unauthorized Outflow / Hacking)

Mt. Gox was once known as the world's largest crypto asset exchange. At its peak, it held funds on behalf of users around the world and carried significant influence over the broader market. In 2014, however, the exchange revealed a massive loss of assets.

According to a statement at the time, roughly 750,000 BTC belonging to customers, along with additional bitcoin held by the company itself, had gone missing—putting the total loss in the hundreds of millions of dollars. The fallout forced the company into bankruptcy, and a large number of users lost their assets as a result.

The way the situation unfolded is also notable. Withdrawals and trading were suspended for an extended period without adequate explanation, and user anxiety grew rapidly as the situation worsened. As a result, trust in the exchange collapsed within a short span of time.

Investigations pointed to unauthorized access exploiting a system vulnerability as the cause, but that alone doesn't tell the whole story. The fact that the problem went undetected for such a long period also points to deeper issues in the company's internal management and oversight.

What this incident makes clear is that crypto asset risk isn't limited to price volatility. If the exchange holding your assets has weaknesses in how it manages security, you can suffer major losses through no fault of your own.

The Coincheck Hack (Unauthorized Outflow / Hacking)

The hack at Coincheck was one of the events that had the biggest impact on Japan's domestic crypto asset market. In 2018, the exchange announced that unauthorized external access had led to the outflow of roughly ¥58 billion (approximately $520 million at the time) worth of crypto assets held on behalf of users.

The asset drained was NEM, and nearly the entire holding was reportedly transferred out without authorization. The irregularity was only detected after the transfer had already occurred, and withdrawals and trading were suspended shortly afterward, disrupting the service as a whole. Part of what made this incident so significant was its sheer scale—even compared to previous large-scale outflows, the losses were substantial, making it one of the largest crypto incidents recorded in Japan.

This marks the largest outflow of virtual currency since Mt. Gox, the Japan-based bitcoin exchange, lost roughly ¥47 billion in 2014.

Source: Nikkei

The cause identified was how the assets were being stored. The crypto assets were reportedly kept in what would today be called a hot wallet (online wallet), connected to an external network, which is believed to have made the unauthorized access possible. Ideally, assets should be managed in an environment isolated from external networks—for example, in a cold wallet (offline wallet)—so that any single breach doesn't lead to catastrophic losses. When such safeguards are insufficient, a single intrusion can directly translate into massive damage.

The FTX Collapse (Misuse of Assets / Poor Management)

The collapse of FTX stands out as a case driven not by an external attack, but by problems within the company's own operations.

In 2022, the company ran into a severe liquidity shortfall and filed for Chapter 11 bankruptcy protection in the United States. According to filings, both assets and liabilities were estimated to be in the range of $10 billion to $50 billion, making it one of the largest corporate collapses in the history of the crypto industry.

At the heart of the problem was how customer funds were managed. Reports indicated that a portion of customer assets had reportedly been lent out to an affiliated company, meaning funds that should have been kept strictly separate were allegedly diverted to other uses. On top of that, the company's financial disclosures were said to be inadequate, and its internal oversight structures reportedly failed to function properly.

As anxiety spread among users, a wave of withdrawal requests followed—but the company was already facing a shortage of funds and could not keep up. Its financial position deteriorated rapidly from there, ultimately leading to collapse.

This case illustrates that crypto asset risk isn't confined to external hacking attempts. When the problem lies in how an exchange itself is run and managed, it can be extremely difficult for users to detect the warning signs in advance—by the time the issue becomes visible, it may already be too late to act.

The Bitconnect Scheme (Ponzi Scheme)

Bitconnect is a well-known example of a scheme that raised funds by promising unusually high returns.

Launched in 2016, the platform offered a “lending” mechanism in which users could deposit crypto assets and earn interest in return. Participants would convert their bitcoin into a proprietary token, lock it up for a set period, and reportedly receive daily interest payments.

What drew particular attention was the scale of the returns, which were close to a daily rate. This interest was said to be generated by an “automated trading bot,” though the specifics of how it actually worked were never disclosed. Regulators in multiple countries eventually raised concerns about the platform, and in 2018 the service was shut down. Its token price collapsed almost immediately afterward, wiping out most of its value in a very short time.

At its core, this case is about a platform promising high returns while offering no transparency into how those returns were actually generated. Even without a clear explanation of how profits were being made, the promise of attractive numbers alone was enough to draw in large amounts of capital.

In the end, the collapse in price led to substantial losses for many users. The episode is a clear illustration of why it matters to look beyond an attractive return rate and ask how those returns are actually being generated.

The PlusToken Scheme (Ponzi Scheme)

PlusToken is another well-known case, one that raised funds under the guise of a wallet service. Launched in 2018, it offered a dedicated crypto wallet through which users could deposit assets and receive periodic rewards. It gained traction primarily among users in China and South Korea, drawing in a substantial amount of funds.

The total damage is estimated at roughly $2 billion to $2.9 billion based on prices at the time. Authorities in multiple countries later arrested individuals connected to the scheme, exposing it as an organized fraud. The case is a reminder that even a seemingly ordinary tool like a wallet warrants caution when it also functions as a place to deposit funds.

Conclusion

The crypto asset space has seen a wide range of incidents over the years—large-scale asset outflows, corporate collapses, and fraudulent fundraising schemes among them. While each case looks different on the surface, they share a common outcome: large numbers of users losing their assets.

What these case studies make clear is that risk doesn't stem from a single source. Sometimes the problem lies in an exchange's security controls; other times, it's operator misconduct or a fundraising scheme built on an opaque mechanism. That's why, when engaging with crypto assets, it isn't enough to focus solely on price movements—you also need to ask where the risk is actually coming from.

Past incidents shouldn't be treated as mere history. Understanding the circumstances that led to each one is what allows you to apply those lessons to your own decision-making going forward.

This article is for informational purposes only and does not constitute financial or investment advice. Please consult a qualified professional before making investment decisions.