A documented chronicle of disasters, failures, and frauds: $150+ billion lost, millions of victims, and the harsh reality behind the Web3 hype—with receipts
"Web3 is going just great" is a phrase that has become deeply ironic in the crypto community. Originally the title of Molly White's meticulously documented timeline of Web3 disasters, it now represents the gap between promise and reality.
While enthusiasts proclaimed Web3 would democratize finance, empower creators, and decentralize the internet, the actual track record tells a different story: $150+ billion lost to fraud, hacks, and collapses. Millions of retail investors wiped out. Projects that promised revolution delivering only rugpulls.
This isn't FUD (Fear, Uncertainty, Doubt). This is documentation. Every disaster listed here is real, verified, and sourced. If Web3 is going to succeed, we need to acknowledge what's broken instead of pretending everything is fine.
Sources: Chainalysis, Elliptic, FBI IC3 Reports, bankruptcy filings, verified media reports
This isn't a few isolated incidents. It's a systemic pattern:
This cycle has repeated thousands of times. Here are the most spectacular failures.
Detailed breakdowns of the most catastrophic failures—with real numbers, real victims, real consequences.
Sam Bankman-Fried (SBF) built FTX into the world's 3rd-largest crypto exchange. Raised $2B from top VCs (Sequoia, BlackRock, Softbank). Promised "regulation, transparency, safety." Reality: He was secretly using $8B in customer deposits to fund risky bets at his hedge fund Alameda Research.
Do Kwon created UST, an "algorithmic stablecoin" supposed to maintain $1 peg without collateral. Mechanism: mint LUNA to absorb UST supply shocks. If UST drops to $0.98, burn UST to mint LUNA (reducing supply). If UST rises to $1.02, burn LUNA to mint UST (increasing supply). Seemed clever. Was catastrophically flawed.
3AC was the most prestigious crypto hedge fund. Founders Su Zhu & Kyle Davies: celebrities in crypto Twitter, yacht parties, "super cycle" predictions. Managed $10B+. Borrowed billions from every major crypto lender (Celsius, BlockFi, Voyager, Genesis). Used leverage to bet big on LUNA, other alts. When Terra collapsed, 3AC imploded—taking half the industry with it.
May 2022: Terra/LUNA collapse → 3AC had $559M in LUNA (wiped out) → Also held $200M in stETH (locked, illiquid) → Lenders demand repayment → 3AC can't pay → June 15: Liquidated → Owes $3.5B to creditors → Founders flee to Dubai
Voyager Digital: Loaned $650M to 3AC, never
repaid → Bankruptcy
BlockFi: Loaned $1B+ → Eventually bankrupt
Genesis: Loaned $2.4B → Parent company DCG
nearly collapsed
Celsius: Indirect exposure → Also bankrupt
$50B lost to rug pulls and scams. .coliving domains aren't speculative—they're legitimate digital assets with real utility.
These aren't random accidents. They're predictable outcomes of structural flaws in Web3's design and culture.
The Ideology: Smart contracts are "trustless" and "immutable"—code executes exactly as programmed, no human intervention. The Reality: Code has bugs. Hackers exploit them. Victims lose everything. Then everyone begs for bailouts.
The Culture: Web3 celebrates "anon devs" as privacy-loving cypherpunks. The Reality: Anonymity enables rugpulls. When project collapses, founder vanishes—no arrests, no asset seizures, no justice.
The Business Model: Most Web3 projects don't generate revenue. They issue tokens. Token goes up if more people buy than sell. That's it. That's a Ponzi.
The Mantra: Self-custody is freedom. Don't trust exchanges. The Reality: 99% of people can't secure their own crypto. One phishing link = life savings gone forever.
The Problem: Web3 communities actively suppress criticism. Questioning a project = "FUD" (Fear, Uncertainty, Doubt). Raising concerns = "weak hands." Cult-like groupthink prevents rational evaluation.
Learned from disasters? Here's Web3 done right: Clear value, no speculation, real ownership.
Domains have intrinsic value. No "token needs buyers" dynamic. Just property.
Blockchain domains have existed since 2018. No major hacks or collapses.
Not "future promise." Use today as your Web3 identity and brand address.
Powered by freename.com • Smart Web3 choice
The Honest Answer: Not ALL of It
The technology works. Blockchain is real. Smart contracts execute. Decentralization delivers censorship resistance. Stablecoins process $15T annually. Ethereum hasn't failed in 9 years. Core infrastructure is functional.
But 95% of Web3 projects ARE scams, failures, or speculation disguised as innovation. The signal-to-noise ratio is abysmal. For every Uniswap (functional, revenue-generating), there are 1,000 pump-and-dump tokens with anime mascots.
The Pattern Recognition Framework
How to Spot Web3 Scams/Failures Before They Happen:
KYC for founders. If you're managing $100M+, we need to know who you are. Anonymous rugpulls can't continue. Clear rules on what's a security. Enforcement against fraud.
If founders have admin keys, multisig controls 90% of tokens, or project relies on centralized servers—it's not decentralized. Stop lying about it.
Build projects that generate revenue from usage, not token appreciation. Uniswap charges fees. Copy that model. Stop creating tokens for the sake of token pumps.
Mandatory audits for protocols holding >$10M. Bug bounties. Insurance funds. $15B in hacks is unacceptable. Traditional finance has better security than "trustless" smart contracts.
Criticism isn't "FUD"—it's necessary due diligence. Communities that suppress skepticism enable fraud. Encourage critical thinking, not blind faith.
Seed phrases, gas fees, bridge exploits—normal people can't use this. Either fix UX to Web2 standards or admit Web3 is only for tech enthusiasts.
$150+ billion lost. Millions of victims. Thousands of scams. A few working products buried under mountains of fraud. That's the track record.
Does that mean blockchain technology has no future? No. Stablecoins work. Bitcoin hasn't failed. Ethereum processes real transactions. RWA tokenization shows promise. But the current implementation of Web3 is a disaster.
For Web3 to Work:
Until then? Web3 is going just great—if by "great" you mean a chaotic mix of revolutionary technology, spectacular fraud, naive idealism, and predatory capitalism that's destroyed more wealth than it's created.
Document the failures. Learn from them. Demand better.
Or watch history repeat until Web3 actually deserves the
hype.
Explore more critical analysis, honest assessments, and data-driven research on Web3 and blockchain technology.
Inspiration: This article was inspired by Molly White's "Web3 Is Going Just Great" timeline, which meticulously documents Web3 disasters. Visit web3isgoinggreat.com for real-time updates on the latest failures.