Crypto Collapses and Scams (2023 – 2025): Billions Lost, Executives Missing, and the Push for Reform
adminOverview
Between 2023 and 2025, the cryptocurrency industry witnessed some of the largest corporate collapses and fraud cases in its short history. Billions of dollars in investor funds vanished through mismanagement, criminal activity, or technical exploits. From New Zealand’s Dasset collapse to Europe’s billion-euro laundering rings and the final chapters of the FTX and Terra Luna sagas, the pattern is clear: rapid growth and weak oversight continue to leave investors exposed.
This article reviews major incidents from the past two years — the money lost, the people involved, and the lessons learned — followed by practical solutions to help prevent future disasters.
Global Highlights: The Major Collapses
FTX (United States / Global)
• Collapse: Late 2022; major sentencing March 2024.
• Amount lost: More than US $8 billion in customer funds.
• Outcome: Founder Sam Bankman-Fried sentenced to prison and ordered to forfeit US $11 billion.
• What went wrong: Misuse of customer assets, poor governance, and absence of oversight allowed one of the largest frauds in modern finance.
Terraform Labs (Singapore / South Korea / U.S.)
• Collapse: May 2022; legal resolution ongoing through 2025.
• Amount lost: Market value wiped out by over US $40 billion.
• Outcome: Co-founder Do Kwon extradited and pleaded guilty in 2025 to U.S. fraud charges linked to the Terra Luna collapse.
• What went wrong: Algorithmic-stablecoin design flaws compounded by false assurances destroyed investor confidence globally.
Genesis Global Capital (U.S.)
• Event: Genesis the lending arm tied to FTX completed a bankruptcy restructuring August 2024.
• Amount: About US $4 billion distributed to creditors.
• What went wrong: Even institutional-lending platforms failed under market contagion after FTX; transparency in lending and liquidity remains critical.
Three Arrows Capital (Singapore / BVI)
• Event: Liquidation proceedings continued through 2024.
• Amount: Interim US $100 million distribution approved to creditors.
• What went wrong: Over-leveraged trading and opaque fund structures amplified systemic risk.
Celsius Network and Tether Settlement (U.S.)
• Event: October 2025 settlement in bankruptcy proceedings. (original collapse in 2022)
• Amount: US $299.5 million paid by Tether to Celsius creditors.
• What went wrong: Interconnected entities and lending practices blurred boundaries between custody, speculation, and yield products.
Transnational Crypto Fraud Ring (Cambodia / Global)
• Event: U.S. prosecutors charged alleged crime boss Chen Zhi, linked to “pig-butchering” investment scams.
• Amount: Authorities seized more than US $14 billion in bitcoin.
• Status: Main suspect remains at large.
• What went wrong: large scale organised crypto fraud allowed criminal networks to exploit borderless crypto flows.
Dasset Digital Asset Exchange (NZ)
• Collapse: August 2023 — one of New Zealand’s few domestic exchanges.
• Amount lost: Roughly NZ $6.3 million in missing customer cryptocurrency; additional unpaid wages and taxes totaling over NZ $200,000.
• Key figure: CEO Stephen Macaskill became unreachable within days of liquidation and remains uncontactable.
• What went wrong: Governance and custody safeguards were weak and largely unregulated.
Pan-European Crypto-Investment Fraud
• Countries involved: Spain, Portugal, Italy, Romania, Bulgaria.
• Losses: Over €100 million stolen from hundreds of investors via fake trading platforms.
• Action: In 2024–2025, Europol and national police forces arrested five suspects and dismantled the network.
• What went wrong: Many victims were targeted through multilingual, cross border online campaigns and call-centre scams.
Spain’s €460 Million Laundering Ring
• Event: June 2025 arrests across the Canary Islands and Madrid.
• Amount: €460 million laundered through crypto exchanges and shell firms.
“Dark Bank” — €1 Billion European Laundering Operation
• Event: January 2025 investigation into Huzefa Hafiz Ismail (“Dark Bank”), accused of laundering over €1 billion for criminal networks through crypto channels.
Germany’s Cyber-Trading Crackdown
• Event: October 2025 — German regulators shut down over 1,400 fraudulent investment websites, many crypto-related.
Solutions: Preventing the Next Collapse
1. Comprehensive Regulation of Custodial Exchanges
◦ Mandate licenses, proof-of-reserves, and independent audits.
◦ Require segregation of client assets and adequate capital buffers.
2. Fit-and-Proper Standards for Executives
◦ Similar to ASIC or EU “senior manager” frameworks: executives must demonstrate competence, integrity, and accountability.
3. Enhanced Consumer Protection
◦ Expand ombudsman powers in New Zealand and EU states to enforce compensation or asset freezes when firms collapse.
4. Cross-Border Coordination
◦ Build joint taskforces between regulators (e.g., FMA, ASIC, BaFin, FCA, Europol) to trace funds and prosecute offenders swiftly.
5. Mandatory Transparency
◦ Exchanges must disclose banking relationships, custodial arrangements, and financial statements quarterly.
6. Technical Standards & Security Audits
◦ Require certified audits for smart contracts, custody systems, and DeFi protocols.
7. Public Education & Risk Labeling
◦ Clear warnings on exchange websites about risks, withdrawal policies, and lack of deposit insurance.
8. Rapid Insolvency and Recovery Frameworks
◦ Standardize treatment of digital assets in bankruptcy to ensure customer claims are prioritized and expedited.
Conclusion
From FTX and Terraform Labs to Dasset and Europe’s billion-euro scams, the pattern of collapse is strikingly consistent: weak governance, blurred regulatory boundaries, and absent transparency.
The difference between future success and another round of losses will depend on whether regulators and industry leaders can align technology innovation with accountability. Crypto’s promise of decentralized finance cannot survive without centralized responsibility — and that means real rules, real audits, and leaders who stay to answer when things go wrong.
