The 8 Events That Shocked the Crypto World

The 8 Events That Shocked the Crypto World


In the dynamic world of cryptocurrencies, where innovation and volatility often go hand in hand, certain events have the power to send shockwaves through the entire industry. From groundbreaking partnerships to catastrophic crashes, the crypto realm has witnessed its fair share of astonishing moments that have left investors, enthusiasts, and skeptics alike in awe.

In this article, we’ll take a walk through memory lane, reviewing eight extraordinary events that have not only reshaped the landscape of digital currencies but have also left an unforgettable mark on the collective consciousness of the crypto world.

February 2014: The Mt. Gox Hack

It was a moment that sent shockwaves through the fledgling cryptocurrency world – a sudden halt to all activities, an offline website, and a vanishing Twitter account. This grim reality unfolded in February 2014 when Mt. Gox, once the largest crypto exchange in the early days of Bitcoin, closed its doors. The tale of Mt. Gox remains a legendary chapter in the history of cryptocurrency exchanges.

Launched in 2007 as “Magic: The Gathering Online Exchange” by U.S. programmer Jed McCaleb, Mt. Gox initially served as a card exchange for the popular fantasy game. However, in 2010, it transitioned into a Bitcoin exchange, quickly becoming a significant player in the market.

During those early days, trading Bitcoin was a cumbersome process, with traders resorting to bartering their digital assets for basic items such as pizzas and t-shirts. Mt. Gox changed the game, offering a simplified platform for buying and selling BTC. Though it came at the cost of relinquishing control over assets to the exchange, investors saw it as a necessary trade-off. The success of Mt. Gox was immediate. As the largest crypto exchange at the time, it handled a significant portion of all Bitcoin transactions.

Along the line, Mt. Gox’s ownership changed. In 2011, McCaleb sold the platform to the French developer Mark Karpelès who became the exchange’s CEO. That same year, the platform hit a bump when it experienced its first hack.

The attackers managed to gain access to Mt. Gox auditor’s computer and altered the price of Bitcoin to 1 cent. They quickly bought an estimated 2,000 BTC at this artificial price using customers’ accounts on the platform. Additionally, about 650 bitcoins were purchased by Mt. Gox customers at the artificial price, none of which was ever returned.

After the hack, Mt. Gox moved to tighten its security, including taking most of its bitcoins offline and keeping them in cold storage. If only the management team knew that this measure would not be enough to protect the exchange in the long run.

Mt. Gox continued waxing stronger, and by 2013, the company had established its position as the largest crypto trading platform, handling more than 70% of all bitcoin transactions. With this large volume, Mt. Gox became synonymous with the crypto market. However, while it appeared to be thriving on the surface, trouble lurked behind the scenes.

In May 2013, Mt. Gox faced a lawsuit from former business partner Coinlab, claiming a breach of contract and seeking $75 million in damages. At the same time, the exchange came under investigation by the U.S. Department of Homeland Security for operating without a license in the country.

These challenges proved to be the cracks that would eventually break the dam. In February 2014, the exchange suspended bitcoin withdrawals, citing the need for a technical assessment. Weeks of uncertainty followed, leading to the suspension of all trading activities and the disappearance of the website and official Twitter account.

Subsequent revelations unveiled the staggering truth – Mt. Gox had fallen victim to the largest crypto hack in history. Hackers had stolen 744,408 BTC from customers’ wallets, along with 100,000 BTC owned by the exchange, amounting to approximately $473 million at the time.

The aftermath was devastating. Bitcoin’s price plummeted, and confidence in the industry was shattered. Mt. Gox then filed for bankruptcy protection in Japan and the United States, marking the end of an era. Investigations later revealed that the exchange had been insolvent for years, with the stolen BTC serving as a final blow to its already precarious financial situation.

Years of legal battles and investigations followed as complex bankruptcy proceedings unfolded. Creditors and investors sought restitution, while key figures like Karpelès faced criminal charges. It’s been nearly a decade since the exchange collapsed, but the recovery and distribution of assets are still ongoing, with creditors still awaiting resolution.

The story of Mt. Gox serves as a valuable lesson, a reminder of the challenges and vulnerabilities that accompanied the early years of the crypto market. It highlights the importance of security, regulation, and transparent operations in building trust within the crypto ecosystem. While the crypto world has matured since then, the legacy of Mt. Gox continues to resonate, shaping the industry’s present and future.


August 2017: Bitcoin Cash Hard Fork

Bitcoin gained immense popularity for its promise to tackle the limitations of traditional finance. However, the protocol was not without its own set of challenges.

As Bitcoin gained traction, scalability issues arose, manifesting as prolonged transaction times and costly fees. These issues stemmed from the size restriction of Bitcoin blocks, which were limited to 1 megabyte (MB). The increasing number of transactions overwhelmed the network’s capacity. In response, the concept of Bitcoin Cash emerged.

In August 2017, a divergence of opinions among Bitcoin developers led to a hard fork of the Bitcoin blockchain. A hard fork is a significant software upgrade that splits a blockchain network into two separate chains. One group maintains the existing rules, while the other diverges to forge its own path with updated software.

Although most Bitcoin developers and miners opted for the inclusion of Segregated Witness (SegWit), a consensus layer designed to enhance scalability, not everyone favored this update. SegWit employs a scaling solution that separates transactions into two segments, reducing their weight on the block and enabling more transactions to be included in a single block.

At block 478,558, the Bitcoin blockchain split, giving birth to Bitcoin Cash. The new fork aimed to address scalability concerns by increasing the block size from Bitcoin’s 1 MB to a range between 8 MB and 32 MB. This increase facilitated the validation of more transactions per block, with the network capable of processing over 100 transactions per second.

While Bitcoin Cash operates under similar rules as Bitcoin, sharing a 21 million supply cap and utilizing the same consensus mechanism, it has not achieved the same level of prominence in the crypto market. Nonetheless, it currently stands as one of the top 30 cryptocurrencies worldwide.

March 2020: Covid Crash

For years, Bitcoin was described as a safe-haven asset and a hedge against inflation, earning the nickname “digital gold” from its enthusiasts. However, in 2020, the perception of the asset as a secure refuge was severely diminished when it fell short of expectations.

The year commenced on an optimistic trajectory, with Bitcoin trading at $7,000. Within a mere six weeks, the digital asset skyrocketed to $10,000. Then, the COVID-19 pandemic struck, catching crypto investors off guard and profoundly impacting the crypto market and the global financial landscape.

Bitcoin’s price swiftly plummeted, sinking below $4,000 within hours. Market analysts attributed this volatile price movement primarily to the influence of the COVID-19 outbreak on global markets, which compelled investors to seek the safety of cash. The sharp decline raised doubts regarding Bitcoin’s potential as a reliable safe-haven asset.


March 2021: Beeple $69M NFT

In 2021, the NFT market emerged as a prominent sector within the digital asset industry, capturing widespread attention. Although non-fungible tokens came into existence in 2014, their popularity soared in 2021, coinciding with the bull market. NFTs quickly transitioned from a relatively unknown niche to a mainstream phenomenon, significantly increasing awareness of digital asset ownership.

However, nobody could have anticipated that a digital artwork would fetch a staggering $69 million. But that is exactly what happened with Beeple’s record-breaking $69 million NFT auction.

Before Q4 2020, the highest sum Mike Winkleman, also known as Beeple, had ever received for his artwork was a mere $100. Beeple introduced his first NFT series to the market in October 2020, with each pair selling for over $66,000. Through a series of subsequent NFT auctions, Beeple established a notable presence in the NFT market, leading up to the largest such sale to date.

The auction took place at Christie’s, a renowned auction house with a 257-year history of selling some of the world’s most famous artworks, including the only known portrait of Shakespeare and the last-discovered painting by Leonardo da Vinci. The event garnered immense attention from crypto and non-crypto investors, particularly as it marked Christie’s inaugural digital-only art auction.

Beeple’s NFT, titled “Everydays: The First 5000 Days,” encompasses a collection of his work spanning 13 years, capturing the evolution of his artistic career. Following a two-week-long auction, Beeple’s NFT fetched an astonishing $69.3 million, firmly establishing him as one of the top three most valuable living artists.

Everydays: The First 5000 Days by Beeple. Source: Christie’s

June 2021: El Salvador BTC Legal Tender

On June 9, 2021, El Salvador, a small Central American nation, made a historic decision as President Nayib Bukele declared the adoption of Bitcoin as legal tender. The groundbreaking decision marked the first time Bitcoin gained recognition as an official currency.

At a time when many countries were tightening their regulations on the industry, including China’s complete ban on crypto operations, El Salvador’s move garnered significant attention. Enacting the Bitcoin Law provided various advantages for crypto businesses and investors, such as exemption from capital gains tax on BTC due to its legal tender status.

But the decision faced opposition from global financial organizations and economic experts. The International Monetary Fund (IMF) urged El Salvador to remove Bitcoin as a legal tender. At the same time, the World Bank expressed concerns over environmental impact and transparency issues and declined to assist with the implementation.

Undeterred, President Bukele announced plans to utilize the country’s renewable geothermal energy for Bitcoin mining and encouraged local companies to adopt BTC for salary payments.

In September 2021, El Salvador made history again by becoming the first country to purchase Bitcoin, acquiring an initial 200 BTC. This marked the beginning of the nation’s entry into the crypto market, with more purchases following suit. El Salvador currently holds over 2,380 BTC, maintaining unwavering confidence in the asset’s future despite its significant price fluctuations.

President Nayib Bukele

October 2021: Shiba Inu Parabolic Rally

The crypto industry is no stranger to impressive short-term gains, but the extraordinary surge delivered by the memecoin Shiba Inu in 2021 caught everyone by surprise. This parabolic rally remains one of the most remarkable financial achievements in history.

Following in the footsteps of Dogecoin’s success, the crypto market witnessed the emergence of various memecoins, including Shiba Inu (SHIB). Founded in 2020 as an experiment in decentralized community building, Shiba Inu had a modest start in January 2021, with minimal trading activity. The coin was so cheap that for as little as $1, one could acquire over 13.6 billion SHIB, with each unit priced at $0.000000000073.

However, as the memecoin’s popularity grew in the subsequent months, so did its value. The SHIB trend attracted thousands of investors looking to make quick profits, propelling the coin into the mainstream spotlight.

With increased visibility, SHIB quickly climbed the ranks in market capitalization and popularity, prompting more crypto exchanges to list it on their platforms. As the number of exchanges offering the coin multiplied, the fear of missing out (FOMO) drove an influx of Shiba Inu holders, enhancing liquidity.

By October 2021, SHIB had shed six zeroes, smashing one all-time high after another, achieving a staggering 100,000,000% growth in just one year! Another significant factor contributing to the rally was the launch of ShibaSwap, the memecoin’s decentralized exchange, in July 2021. The platform improved liquidity and enabled SHIB holders to stake their assets and earn passive income, incentivizing long-term coin holdings.

Although Shiba Inu’s price has since declined from its 2021 all-time high, investors remain hopeful of a potential revival of this historic rally. While it may be challenging to envision such a resurgence in the near future, one can never truly predict what lies ahead, especially in the ever-changing crypto market.

May 2022: DoKwon/Terra Collapse

Stablecoins have often been considered a safer choice in the digital asset space due to their relatively stable prices. However, that notion was shattered in the Terra ecosystem, exposing the risks involved.

Terra is a blockchain protocol that leverages algorithmic stablecoins to create a payment network. At its peak, Terra provided investors with fully stable prices through the relationship between its native token, LUNA, and the popular dollar-pegged stablecoin within its ecosystem, UST.

Instead of relying on reserve assets, LUNA maintained price stability for UST through a smart contract-based algorithm. The algorithm utilized arbitrage trading to uphold prices, allowing users to seamlessly exchange LUNA for UST at a 1:1 ratio, regardless of the tokens’ market prices.

When demand for UST surged, driving its price above $1, LUNA holders could swiftly swap their tokens to mint one UST and profit from the price difference. During the token swap, a portion of LUNA was burned, reducing UST demand and increasing its supply. This mechanism restored UST’s market price to $1. In contrast, when UST demand waned and prices dropped below $1, holders could exchange UST for LUNA, which held a higher value.

Trouble began for the Terra ecosystem when an anonymous wallet dumped over $500 million worth of UST. Whether this action stemmed from market volatility or a malicious attack on Terra’s system remains unknown. In an attempt to rescue UST, the Luna Foundation Guard (LFG), an organization responsible for building reserves, emptied its Bitcoin reserve to support the stablecoin’s peg during volatile market conditions.

However, these efforts failed to prevent the collapse of the stablecoin. As UST lost its peg, investors rushed to sell, causing LUNA to shed 99.9% of its value.

The damage inflicted by the crash extended beyond the Terra ecosystem, as the event exacerbated the prevailing bearish market sentiment, dragging down the entire crypto market. The Terra UST collapse wiped out over $26 billion from the stablecoin market and more than $700 billion from the broader crypto sector.

Even before the UST crash, numerous analysts cautioned investors about the risks of Terra’s mechanism, and they were quick to assert their earlier concerns when the Terra ecosystem crumbled.

The project’s founders became targets of industry scrutiny. In the aftermath of Terra’s catastrophic failure, Korean investors initiated legal actions against the co-founders, filing criminal and civil lawsuits while seeking to seize the assets of Terra’s Do Kwon.

The South Korean government summoned Kwon to give accounts of the collapse of both LUNA and UST. The authorities also called upon executives from local crypto exchanges to explain their actions during UST’s depegging.

Kwon is currently facing document forgery charges in Montenegro, where he was arrested while on the run.


November 2022: SBF/FTX Failure

November 2022 marked the downfall of Sam Bankman-Fried (SBF) and his bankrupt crypto exchange, FTX. SBF had been hailed as a key figure in driving mainstream adoption and a crypto champion within and beyond the industry. As FTX grew, the 31-year-old entrepreneur became synonymous with the company, gaining prominence in the crypto world.

Founded in 2019, FTX rapidly gained international recognition through aggressive marketing tactics and attractive trading fees, luring crypto and non-crypto users. The exchange promised substantial returns on digital asset holdings, surpassing traditional banking offerings. FTX’s Super Bowl ads, celebrity endorsements, and arena naming rights with the Miami Heat made them hard to ignore.

FTX and SBF aimed to solidify their dominance by acquiring high-profile companies like Blockfolio, LedgerX, and Liquid Global. With almost $2 billion in investments from venture capital firms, FTX’s valuation reached $32 billion by January 2022, and the company was ranked as the third largest crypto exchange in the industry.

To further strengthen his company’s dominance in the space, SBF became Crypto’s White Knight by rescuing numerous firms impacted by the first wave of the bear market, which stemmed from the Terra-Luna crash.

As the CEO of FTX, SBF played a pivotal role in supporting and revitalizing struggling companies within the crypto industry. His intervention provided a lifeline to these firms during a challenging period characterized by plummeting prices and market uncertainty. SBF’s efforts were widely recognized and celebrated, positioning him as a prominent figure in driving the industry forward.

However, in the first two weeks of November, FTX and its founder lost their shine as the third-largest crypto exchange collapsed. Trouble started when a CoinDesk report revealed that FTX’s sister trading house Alameda Research was in a dire financial condition. The publication also unveiled a major fraud that caused the loss of billions of dollars in investors’ assets.

Alameda’s balance sheet, composed mainly of FTX’s FTT token and Solana’s SOL token, disclosed $9 billion in liabilities, $900 million in assets, and poorly labeled records revealing an $8 billion negative balance. Investigations uncovered FTX’s diversion of investors’ funds to other investments using FTT as collateral through Alameda.

FTX and its affiliated companies lacked transparency, neglecting standard financial reporting practices that disclose assets and liabilities. This made it difficult to ascertain the company’s funds and their allocation.

Upon learning the news, Binance’s CEO, Changpeng Zhao, announced plans to sell his company’s FTT holdings worth over $500 million. The announcement triggered panic selling, rendering the FTT token practically worthless. FTX then suspended all withdrawals on its platform, causing shockwaves throughout the market.

Initially, CZ offered to assist FTX and prevent a broader market crash. However, the deal fell through due to a closer examination of FTX’s balance sheet and further reports of mishandled customer funds.

The collapse of FTX had a cascading effect on the entire industry, particularly affecting crypto firms associated with it. Numerous companies, such as BlockFi, with significant exposure to FTX, had to halt withdrawals following the overwhelming number of users’ requests. Most of these firms eventually filed for bankruptcy protection.

Major FTX investors, including CoinShares, Galaxy Digital, BlackRock, and others, wrote off millions of dollars in losses. Several projects that FTX had invested in also suffered significant treasury shortfalls.

Unable to secure a lifeline, FTX initiated bankruptcy proceedings, leading to SBF stepping down as CEO. John J. Ray III, FTX’s new CEO, described the collapse as a “complete failure of corporate control” unprecedented in his experience managing the aftermath of major corporate failures.

Criminal charges and lawsuits flooded in, including a class-action lawsuit filed by FTX investors on November 15 against FTX and its celebrity endorsers, including Naomi Osaka and Tom Brady. The lawsuit alleged “false representation and deceptive conduct.”

SBF was arrested in the Bahamas on December 12, extradited to the United States, and released on a $250 million bond. He faces multiple criminal charges, including money laundering, wire fraud, campaign finance violations, and securities fraud.

Source: Sky News

Due to the numerous lawsuits against FTX, several partners, including the Miami Heat, terminated their agreements with the exchange.

The FTX saga also prompted increased scrutiny of the crypto industry by global financial regulators. The UK government announced plans to implement stringent regulations for the industry in response to the collapse of FTX.

As of April 2023, FTX had managed to recover more than $7 billion in lost customer assets. The funds are now set to be distributed among the affected clients, numbering over 150,000.

Despite the significant losses and the tarnished reputation of SBF and FTX, efforts are underway to restore stability and trust within the crypto industry, aiming to prevent similar incidents in the future.


While most of these events harmed the broader crypto market, it is worth noting that the industry has always found a way to bounce back, better than before, with great lessons to learn.

Furthermore, most of these events serve as a cautionary tale, highlighting the need for transparency, responsible financial practices, and regulatory compliance as the crypto market matures.

As we enter a new phase of growth in preparation for the next bull run, the market will be better prepared to navigate similar situations. Which of these events did you personally witness?

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