5 Crypto Coin Collapses That Shook the Industry
Since the rise of altcoins, the crypto space has been a hotbed of innovation—along with some spectacular failures. While many projects offered new ideas and ambitious roadmaps, not all were built to last. From technical flaws to outright fraud, here are five of the most shocking collapses in crypto history.
1. LUNA/UST – The $40 Billion DeFi Implosion
Launched in 2018, Terra’s ecosystem included the LUNA token and UST, an algorithmic stablecoin designed to maintain a 1:1 dollar peg without being backed by fiat. Instead, it relied on a dynamic balancing act between LUNA and UST.
Everything unraveled in May 2022, when market volatility caused UST to lose its peg. As LUNA’s price also dropped, the algorithm failed to stabilize the system. Panic selling triggered hyperinflation, and within hours, $40 billion in market value had evaporated. It remains one of the most devastating events in DeFi history.
2. Mantra – Insider Trading Allegations and a 90% Crash
Mantra positioned itself as a Real World Asset (RWA) platform, aiming to tokenize tangible assets like real estate or vehicles. Its OM token gained traction—until April 2025.
In a matter of hours, OM dropped from $6.30 to under $0.50. Rumors of insider dumping quickly spread. Investigations revealed two community wallets offloaded large quantities of tokens during the crash. While developers deny involvement, the token’s market cap dropped from over $6 billion to just $681 million, with questions still swirling around what really happened.
3. Bitconnect – Crypto’s Most Notorious Ponzi Scheme
Bitconnect launched in 2016 during crypto’s first major bull run. It promised users high returns through lending and trading powered by its BCC token. At its peak, it claimed up to 16% annual interest and became known for its over-the-top marketing events.
By early 2018, the platform was exposed as a Ponzi scheme. After regulators cracked down, Bitconnect collapsed, wiping out $2.75 billion in market value. The U.S. SEC later charged the operators with defrauding investors of $2.4 billion.
4. Celsius Network – $1.2 Billion Frozen and Bankruptcy
Celsius was a crypto lending and borrowing platform that offered zero fees and attractive returns. At its peak, it claimed over $12 billion in assets and $8 billion in loans.
But in June 2022, amid a market-wide downturn, Celsius froze withdrawals. The company later admitted to poor investment strategies—including heavy exposure to FTX. By July, Celsius filed for bankruptcy, leaving users locked out of $1.2 billion in funds. The firm has since agreed to pay a $4.7 billion fine, one of the largest in crypto history.
5. FTX – The $8 Billion Catastrophe
FTX was once a top global crypto exchange. Its founder, Sam Bankman-Fried, was seen as a rising star in the industry—until it all unraveled in late 2022.
Investigations revealed that FTX had been misusing customer funds, funneling billions into its sister company, Alameda Research. Lavish spending, poor risk management, and fraudulent practices came to light. In the end, over $8 billion in user funds vanished. Bankman-Fried was sentenced to 25 years in prison, and the fallout from FTX’s collapse caused ripples throughout the industry.
What These Collapses Teach Us
These five stories share a common thread: rapid growth, hype, and a sudden, dramatic fall. Whether caused by flawed mechanics, bad leadership, or outright fraud, each case shows how risky the crypto space can be—especially with newer, untested projects.
While it might seem frustrating that most people can’t afford a full Bitcoin, its steady growth and resilience over the years prove its long-term value. Compared to volatile altcoins, Bitcoin remains a reliable choice for those seeking to invest in the decentralized economy without gambling on the next big thing.
Bottom line: Innovation is exciting, but caution is essential. Not all that glitters in crypto is gold.
