There are plenty of big success stories in the crypto Industry. The industry’s growth has attracted many investors, but the path has been littered with some painful failures. Let’s talk about crypto companies that went bankrupt, why it happened, and what we can learn from these failures.
5 Crypto Company That Went Bankrupt:
The trend of crypto bankruptcy started with Mt. Gox back in 2014. Later, we saw many established and promising crypto platforms turn into dust. Let’s see the story of 5 crypto exchange platforms, that went bankrupt:
1. Mt. Gox
Brief Background
Mt. Gox started its journey in 2010. It was one of the first Bitcoin exchanges in the world, based in Tokyo, Japan, and quickly became one of the largest exchanges. It was conducting around 70% of all Bitcoin transactions at one point. The platform was simple and had no competitors back then.
What Went Wrong
In 2014, the company declared Bankruptcy and had to stop trading, as it lost 850,000 Bitcoins. There were some significant issues with the security, which allowd hackers take away about $450 million worth of Bitcoins without being detected. Though they could recover some BTCs, it was not enough to meet the customer’s funds.
Aftermath
The downfall of Mt. Gox highlighted the importance of security and auditing for Crypto Exchanges. There were several lawsuits and legal proceedings. About 20,000 BTCs were recovered, but it became difficult to repay the users. Even now, after so many years of the event, the payout process is ongoing. This was a serious sign that the industry needed to strengthen its security and improve its internal ecosystem.
2. QuadrigaCX
Brief Background
QuadrigaCX was Canada’s largest crypto coin listing company. The company offered Canadians a convenient way to trade Bitcoins and other digital currencies. The company was founded in 2013, and in only 4 years, it acquired 10,000 customers and millions of trade volume daily.
What Went Wrong
In 2019, the company announced the death of co-founder Gerald Cotten. As per the company’s statement, only Cotten had access to the QuadrigaCX’s private keys. As a result, about $190 million of customer’s investments were locked. According to investigations, there were a series of suspicious transactions, and the funds were long gone before Cotten’s death.
Aftermath
In April 2019, QuadrigaCX declared Bankruptcy. Later, the Ontario Securities Commission stated that the company was a Ponzi scheme and that all the investors’ funds were spent. QuadrigaCX’s case was a warning to crypto companies that no single person should have any exclusive control over assets.
3. Celsius
Brief Background
Celsius was founded in 2017 as a crypto lending and borrowing platform. The company provided high profit on customer deposits and better annual percentage yields than traditional banks. Celcius used customers’ Crypto to invest and returned it with higher interest. By 2021, the company earned enough attention and managed to have billions of assets under its hood.
What Went Wrong
In June 2022, the company stopped customer payouts, stating “extreme market conditions,” Later, the company filed for Bankruptcy in the U.S. Bankruptcy Court. According to investigations, Celsius was affected by the downfall of crypto prices and was in a shortage of $1.2 billion in their balance sheet.
Aftermath
The platform’s “Terms of Use“ state that they can do anything with their user’s assets. Many investors were not aware of the platform’s risky activities. The Legal proceedings are running to date, but there is uncertainty about when the customers will be fully paid. Celsius was an example that high profit can’t always be safe, and centralized lending platforms should have a regulated environment.
4. Voyager Digital
Brief Background
Voyager Digital started as a crypto brokerage service offering commission-free trading across various exchanges. It allowed users to trade different cryptocurrencies in one app and offered interest on particular tokens. By 2021, Voyager had around 3.5 million users and was openly traded on the Toronto Stock Exchange.
What Went Wrong
In mid-2022, the crypto industry faced a substantial decline. Voyager had lent over $650 million worth of digital assets to Three Arrows Capital (3AC), which crashed during the downfall. As a result, it was when markets dropped. This caused a massive void in Voyager’s finances. In July 2022, Voyager stopped trading and withdrawals and then filed for Bankruptcy.
Aftermath
Voyager tried to sell its assets to FTX, but it failed after FTX collapsed. The customer’s funds were stuck for months. Legal proceedings on compensation are still ongoing, but it’s still unclear how much the creditors will recapture. Voyger’s downfall was a prime example of the need for better due diligence before loans.
5. FTX
Brief Background
Founded in 2019, FTX became a leading crypto exchange within a couple of years. The company had a valuation of $32 billion and established itself as a trusted trading platform. The user-friendly interface, sports endorsements and proper marketing made it a go-to exchange for all.
What Went Wrong
In November 2022, a leaked balance sheet showed that Alameda Research, a firm owned by the co-founders of FTX, had a large number of FTT (FTX’s token). People felt secure after the incident and started selling their tokens. However, the company was able to meet millions of withdrawal requests as they misused customer findings for risky trading bets.
Aftermath
FTX filed for Bankruptcy on November 11, 2022. Billions of dollars of digital assets went missing. The CEO of the company was arrested and later sentenced to 25 years in jail. FTX showed the crypto world that even a multi-billion dollar company can be destroyed due to poor management and lack of ethical leadership.
What Can We Learn From The Downfalls?
The bankruptcies of the crypto firms showed different shortcomings of the crypto world. Some companies were ruined for security issues, while others were for scams and risky decisions. So, investors should be more careful when putting their money in exchanges. Here are some lesions:
- Don’t Keep All Your Crypto on One Exchange: Depending on a single platform can be a huge gamble.
- Research the Team and Financial Practices: A company’s reputation can’t guarantee good business practices.
- Stay Aware of Regulatory Changes: Some platforms may not be able to cope with Crypto’sCrypto’s legal changes.
- Understand Where Returns Come From: High profit is equal to higher risk. If something seems too good to be accurate, it probably is.
- Use Reliable Wallet Solutions: Consider multi-signature wallets for better control over your assets.
Final Words:
The world of cryptocurrency moves so quickly that it’s easy to get hyped and miss essential risks. When choosing an exchange platform, spend some time verifying security measures, financial transparency and overall stability. It’s extra effort, but it can save you from having your funds lost to the subsequent big collapse.
Read Also: Top 10 Cryptos with the Lowest Network Fees in 2025
