Web3 Disasters Since 2021: $68 Billion in Losses
→ 500 events, ranging from $800 to $40 billion in losses
→The majority of these losses came from just three events in 2022
The biggest web3 disasters and scams, including one going on right now 👇
1. FTX and Sam Bankman-Fried:
In November of 2022, one of the largest cryptocurrency exchanges, FTX, announced that the company simply did not have the money to cover all of it's investors holdings.
Basically, your bank says you can't withdraw your money.
Scary, right?
Panic spread, crypto bled, and FTX CEO Sam Bankman-Fried would later be convicted of fraud.
Total Losses: $8.7 Billion
2. Terra and LUNA:
The Terra blockchain was created as a decentralized payment system that utilized stablecoins (crypto assets tied to the US Dollar or other assets to remain priced at $1.)
An arbitrage mechanism allowed the native stablecoin (UST) to maintain its $1 valuation.
In May of 2022, investors became skeptical of high valuations in the ecosystem, and the price of UST began to slip.
Users were able to use the arbitrage to trade 1 UST for $1 worth of LUNA. Since UST was below $1, investors switched to LUNA for a better deal.
The circulating supply of LUNA grew from 380 million tokens on May 10 to 6.5 trillion tokens by May 13.
This hyperinflation caused LUNA to drop from $62 to $0.0003, becoming worthless in just 4 days.
Terraform Labs’ co-founder, Do Kwon, remains in custody in Montenegro, awaiting charges.
Total Losses: $40 Billion
3. The Ronin Bridge Attack:
In March of 2022, The Ronin Network, a critical bridge chain that powers Axie Infinity, was attacked.
The hack came via North Korea's Lazarus Group, who exploited the Ronin Network in an extensive social engineering hack.
Total Losses: $625 Million
Why Does It Matter?
While collapses at the exchange level have bigger losses, hacks, scams and rug pulls happen every day to individuals on platforms like Discord and Twitter / X.
Current Scam:
One of the more recent attacks I've seen involves the discord invite link to a servers' discord.
Alot of servers have custom links (discord. gg/millzone) for example.
If my server falls under a threshold for discord "boosts," my link is no longer valid, and another party can use the same invite link to now redirect to their own discord.
Companies that don't notice will still have the scam link posted on websites, marketplaces like OpenSea, and their official Twitter / X pages.
The link, which was once legitimate, will direct you to a copycat discord with scam links waiting to phish your private keys and assets.
Watch out!
Always make notes on discord bots to remind yourself which ones are the real thing.
Final Thoughts:
It is worth noting that 2022 was a historically bad year for investments of any kind, not just crypto.
Greed, exploits, hacks, and scandals will exist anywhere that there is money to be made. By learning from past mistakes, we can all prevent future scams and make life miserable for attackers.
As we are anticipating a great 2024, please take a moment to make sure you are protected.
Up from here!
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