How to MESS-UP in Generating and Capturing Wealth in Crypto

Several cryptocurrencies have emerged with enormous buzz tied to trending ideas like decentralized finance, stablecoins, celebrity endorsements, meme culture, or high-return lending, only to collapse spectacularly due to issues such as flawed designs, fraud, market manipulation, or rug pulls, wiping out billions in investor value.

These echo the fate of Movement (MOVE), which suffered a massive 80%+ drop in 2025 after token-dumping scandals and secret insider deals led to exchange delistings, or Terra (LUNA), whose algorithmic stablecoin imploded in 2022.

- **Terra (LUNA/UST)**: Introduced as a revolutionary algorithmic stablecoin system offering stable yields and DeFi advancements, it drew in massive investments. In May 2022, UST broke its dollar peg amid a targeted attack and inherent vulnerabilities, causing LUNA to inflate wildly and crash from over $100 to virtually nothing, vaporizing around $40 billion and sparking broader market turmoil.

- **FTX Token (FTT)**: Linked to the FTX exchange, which marketed itself as a cutting-edge, trustworthy trading hub with star endorsements and high-profile ads. Founder Sam Bankman-Fried's fraudulent handling of user funds triggered a liquidity meltdown in November 2022, sending FTT down 80% in days during $6 billion in withdrawals, ending in bankruptcy with ecosystem losses between $10-50 billion.

- **Celsius (CEL)**: Marketed as a lucrative crypto lending service with yields up to 18% on deposits, targeting everyday investors for easy passive income. Hit by market downturns and bad bets (including Terra exposure), it halted withdrawals in June 2022, filed for bankruptcy with a $1.2 billion shortfall, and stranded funds for 1.7 million customers.

- **Voyager (VGX)**: A popular crypto trading and lending app that rode the 2021 bull market with zero-fee trades and attractive interest rates. It collapsed in July 2022 after a $665 million loan default to the failed hedge fund Three Arrows Capital (also hurt by Terra), resulting in bankruptcy and frozen user assets.

- **Bitconnect (BCC)**: Promoted during the 2017 ICO craze as a lending platform with assured daily returns up to 1% via trading bots and staking. Exposed as a Ponzi scheme, it closed in January 2018 under regulatory pressure, with BCC dropping over 90% and investors out $2.5 billion.

- **SafeMoon**: Burst onto the scene in 2021 during the meme coin frenzy, touting unique tokenomics like holder rewards and anti-dump liquidity mechanics. Founder-led pump-and-dump accusations sparked lawsuits, a 99% fall from its high, and removals from key exchanges by 2022.

- **Squid Game Token (SQUID)**: Exploited the 2021 Netflix series hype, promising a play-to-earn game with huge payouts. It was a classic rug pull shortly after launch, with creators siphoning liquidity and the token plunging 99.99% from $2,800 to near zero, defrauding holders of roughly $3.3 million.

- **Yeezy Money (YZY)**: Launched in 2025 by Kanye West (Ye) as a Solana-based memecoin tied to his brand, hyped as a "Yeezy currency" for fan payments and a decentralized economy. It briefly hit a $3 billion fully diluted valuation amid celebrity buzz but crashed 60-80% within days due to insider wallet dumps (96% of supply pre-allocated), hack claims, and scam allegations, leaving most investors with heavy losses.

These failures frequently stem from overleveraged structures, opacity, or deliberate deceit, fueled by speculative frenzy. In 2025, more than 1.8 million crypto projects folded (many early in the year), including a $19 billion liquidation wave in October that highlighted systemic weaknesses. Multiple DeFi stablecoins also depegged, like First Digital USD (FDUSD) in March over reserve doubts, adding to the chaos.

Looking ahead, watch for cryptos showing classic warning signs of potential collapse or scams, such as anonymous teams, unaudited code, unrealistic yield promises, heavy social media hype without real utility, insider-heavy token distributions, or quick pumps followed by dumps. Celebrity-backed memecoins are particularly risky, often riding fame without substance. For instance, Iggy Azalea's MOTHER token, launched in 2024 on Solana amid her rap fame and meme trend, skyrocketed to a $200 million market cap initially but has since dropped about 97% from its all-time high, now hovering around $7 million despite recent 20-25% bounces tied to platform migrations. While it's attempting to add features like a creator launchpad, its volatility, reliance on hype, and history of rapid declines mirror the red flags seen in many failed projects.

Other trends to monitor include Solana-based memecoins with sudden buzz, DeFi protocols offering "guaranteed" high returns, or NFT/game tokens vanishing after fundraising—always research thoroughly and avoid FOMO-driven investments.

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