Key Takeaways
- 2024 saw Bitcoin hitting new all-time highs and Solana reaching maturity – but it wasn’t sunny for everyone.
- DeFi disasters, data breaches, and some unfortunately timed Bitcoin sales were among the year’s most memorable faux pas.
- The mismanagement of Celsius Network, Hawk Tuah Token’s pump-and-dump, and Gen Z QUANT stressed the need for skepticism and research in crypto.
- The resignation of Gary Gensler from the SEC signaled a potential shift toward clearer and more balanced crypto regulations.
There’s no denying it: 2024 has been a whirlwind for the crypto world. Bitcoin hit new all-time highs, Solana reached critical mass in activity, and altcoin season sparked a wave of trading activity and a new generation of memecoins.
Yet despite the well-documented highs of 2024, not everyone emerged victorious, with scams, missteps, and controversies making their mark on an unlucky few. From massive breaches to high-profile convictions, the past 12 months have reminded everyone that crypto – and politics – can be fickle. In this article, let’s delve into some of the biggest crypto fails of 2024.
Biggest Crypto Fails of 2024
While crypto continues to grow in mainstream appeal, it remains fertile ground for errors, scams, and scandals. 2024 was no exception with several moments serving as a stark reminder of the risks inherent in the space. Let’s have a look at some of the most memorable crypto fails of the year.
Dogwifhat Slippage Fail
Dogwifhat (WIF), inspired by the iconic Shiba Inu token trend, launched with a lot of buzz. Rising quickly to a market cap in the millions, WIF turned into one of the biggest memecoins on Solana. But in January, one ambitious trader appeared to get carried away with the WIF hype, accruing some huge losses in the process.
The unlucky DeFi trader spent $8.8 million buying WIF but walked away with just $3.1 million worth of the token. Why? The answer lies in a well-known phenomenon known as slippage, a critical parameter in DeFi trading that causes price variability during transactions where there is low trading liquidity. In this case, the lack of available liquidity for the huge trade caused a massive spike in the token’s price when the user initiated the buy, causing him to buy the bulk of his tokens at a much higher price than intended. This led to a loss of $5.7 million – and universal mockery from the degen community, with some even claiming the “mistake” was actually a marketing ploy for WIF
Whatever the truth, the Dogwifhat slippage debacle underscored the importance of understanding how decentralized exchanges work. Thankfully, the trader probably recouped the losses throughout 2024, as the token continued to rise in price.
Gemini’s Mega Breach
On 19 August, a Genesis creditor became the victim of a sophisticated social engineering scheme. As a result, the attackers were able to steal $243 million in cryptocurrency.
The scammers impersonated Google Support via a spoofed phone number, gaining access to the victim’s accounts. Then, they followed up with a second call, posing as Gemini support, to claim the victim’s account had been compromised. The criminals convinced the victim to reset their 2FA and transfer funds to a compromised wallet.
The attackers also accessed the victim’s private keys, allowing them to siphon $243 million in crypto. The stolen funds swiftly moved across multiple crypto wallets and got split among various individuals. Onchain investigator ZachXBT found that the criminals transferred the funds through cryptocurrencies via at least 15 different exchanges. The key figures in the scheme, identified as Greavys (Malone Iam), Wiz (Veer Chetal), and Box (Jeandiel Serrano), left significant clues that led to their capture.
Authorities utilized open-source intelligence (OSINT) to track their activities. The operation culminated in September with the arrests of Box and Greavys, sparking discussions about the need for enhanced cybersecurity and regulatory measures in the digital asset space.
Germany’s Big Bitcoin Mistake
In July, Germany sold nearly 50,000 bitcoins seized from criminal assets at an average price of $53,000 per coin, generating approximately $2.8 billion. At the time, this probably seemed like a really good deal. However, fast forward to today, those holdings would now be worth around $5 billion, representing a missed profit of $2.2 billion.
The sales, conducted as part of the “Movie2k” criminal case, were required under German law, which mandates the sale of assets when their market value fluctuates by over 10%. This decision coincided with Bitcoin’s surge just a couple of months later, driven in part by Donald Trump’s victory in the U.S. presidential elections. Bitcoin’s price soared and reached a new all-time high of more than $103,000.
Celsius Founder Admits Fraud
Alex Mashinsky, the founder and former CEO of Celsius Network, pleaded guilty to two counts of fraud on December 3. He admitted to misleading customers and manipulating the price of Celsius’ proprietary token, CEL. Initially charged in July 2023 with seven counts of fraud, conspiracy, and market manipulation, Mashinsky confessed in court to providing false assurances about regulatory approval for Celsius’ “Earn” program. He also secretly sold his CEL holdings while inflating its value.
Federal prosecutors revealed Mashinsky personally gained $42 million from these sales, leaving customers to bear losses when Celsius filed for bankruptcy in 2022. As part of a plea deal, Mashinsky waived the right to appeal any sentence of 30 years or less, with sentencing scheduled for April 8, 2025.
Founded in 2017, Celsius had grown rapidly during the pandemic but collapsed alongside falling crypto prices in 2022, leaving customers unable to access funds. Celsius’s downfall highlighted the dangers of centralized lending platforms and the need for stricter oversight.
RTFKT – The Dream is Over
RTFKT, the digital fashion and technology company acquired by Nike in 2021, announced in early December that it is shutting down operations. Known for its Ethereum-based NFTs and collaborations with high-profile artists like Takashi Murakami, RTFKT gained prominence selling digital and physical collectibles. This included its flagship Clone X NFT collection.
Despite initial success, the company faced globally declining interest in NFTs and plummeting prices for its collections, leading to its closure. Nike, which acquired RTFKT to advance its digital transformation, has hinted at scaling back its Web3 initiatives, with its virtual creations platform, Swoosh, pausing new NFT launches.
The Web3 community expressed interest in reviving the brand. However, RTFKT’s leadership stated that it will now remain “an artifact of cultural revolution”.
Hawk Tuah Token Pump and Dumps
Launched with aggressive marketing campaigns and bold promises, the Hawk Tuah Token quickly gained traction on Solana. It reached hundreds of millions in market capitalization less than an hour after launch. Then, it lost 95% of its value.
Created by the influencer Haliey Welch, better known as the Hawk Tuah girl, the token gathered significant social media attention. As a result, many users were fooled into putting their money into it. The team behind the token denied allegations of insider trading but tracking the activity on the blockchain proved otherwise.
The incident underscored the importance of conducting thorough research before participating in new token launches.
Gen Z QUANT Rug Pull Regret
Memecoins are full of bold characters, but one Gen Z trader shocked his livestream audience on pump.fun by openly rug-pulling his self-created cryptocurrency, $QUANT, pocketing 128.3 SOL (approximately $30,000). However, in a strange twist, the crypto community quickly turned the abandoned token into a viral sensation. This propelled its market cap to $35 million. Ironically, the trader’s initial holdings would have been worth over $1.28 million if he hadn’t sold them.
Adding to the fallout, crypto investigators doxxed the trader, exposing his identity and personal details. Meanwhile, $QUANT became a community-driven success. Viral clips of the incident drew sharp criticism online. Some comments predicted future regret and possible legal consequences for the young streamer.
This incident highlights the volatility of the crypto market and its surprising resilience. In the end, the community transformed a rug pull into a rallying point for collaboration and revival.
Gary Gensler Jumps Before Pushed
Gary Gensler, the embattled chair of the SEC, resigned in 2024 amidst mounting criticism of his handling of cryptocurrency regulation. During his campaign, president-elect Donald Trump promised that he’ll remove Gensler on day one. On 21 November, the SEC chair announced his official resignation on January 20, the same day Trump will be inaugurated.
Gensler’s tenure utilized aggressive enforcement actions and provided no clarity on crypto policies, which many argued stifled innovation. Gensler’s resignation is seen by many as a turning point for the industry.
User Loses Millions to Phishing Attack
On 12 December, X user anchor_drops reported that he lost 10 BTC and $1.5 million in NFTs from his Ledger hardware wallet. If true, this would mark one of the biggest individual losses for the year. In his post on X, anchor_drops directly asked Ledger about the event and how it was even possible since he hadn’t touched the wallet in months. Later, it was revealed that the incident occurred as a result of a phishing attack that happened in February 2022. The hacker remained dormant for years until he finally decided to drain the wallet. Consequently, anchor_drops received some harsh rebuttals from the X crypto community.
According to Hakan Unal, senior blockchain security scientist at Cyvers, the evidence showed that anchor_drops signed a phishing transaction on Ethereum nearly three years ago, unknowingly granting approval to a malicious actor. This explained the loss of the NFTs but the theft of the 10 BTC remains a mystery. Our best guess is that either anchor_drops signed another malicious transaction or he made it up.
Closing Thoughts
The crypto industry’s highs in 2024 were met with equally striking lows. Scams, missteps, and controversies left their mark on the ecosystem. From mistakes to fraudulent schemes, the year has been a rollercoaster for both investors and developers.
The future of crypto may hold immense potential but it is essential to remain cautious and informed.
