The 5 Events That Shocked The Crypto World

Crypto realm is indeed an exceptional industry, and as a newly-emerged concept it tended (and still tends) to go through a great bunch of ups and downs. Some of them are so appalling that they carved their fundamentals in crypto economics’ state-of-things. I offer you to take a reminiscent walk and try to think of the most crucial, the most loud and the most depressful pages of crypto history.

№1. Prominent Rise and Dramatic Fall of Mt.Gox (2014)

Infamous Mt.Gox, formerly one of the largest crypto exchanges over the globe, initially originated in 2007 as “Magic: The Gathering Online Exchange” — a card exchange for the popular fantasy game. Three years later, it transformed into a Bitcoin stock exchange and gained a major leadership in the market.

Mt.Gox became not only the major crypto entity but also established a reputation of a game-changer. In that day and age, cryptocurrency as a concept was not considered a reputable and full-fledged digital asset by and large. As a matter of fact, those were the times when Bitcoin was a winning price for esports tournaments, and tradable options for it were literally clothes and pizza, defining cryptocurrency as pretty rudimental valuables. Mt.Gox, though, entered the realm by coining a simplified service for buying and selling Bitcoin. Consequently, that did the trick. The stock exchange experienced an astonishing thriving and succeeded in taking over a vast majority of all Bitcoin transactions.

Not surpisingly, Mt.Gox’s success made it a foremost target for hackers. The first attack on the exchange managed to change the price of Bitcoin to 1 cent. The attackers instantly purchased 2000 BTC, and so did the customers who bought circa 650 coins. The aftermath of the theft drove Mt.Gox to reinvent the precautions they took and store the lion’s share of crypto assets in cold wallets. Alas, that did not essentially guarantee the exchange’s security.

As Mt.Gox carried on strengthening its position of crypto market’s undisputed leader, the obstacles began to occur. Whilst a former business partner Coinbase sued the exchange for a breach of contract, the US Department of Homeland Security accused it for providing services without a license. However, the pivot that caused Mt.Gox to go to the wall was the largest hacker attack aimed at crypto in the history. The malicious entities succeeded to steal 744,408 BTC or circa $473 million in money equivalent as of that time.

The appalling consequences of the hacking shook up not only the Mt.Gox, but also the industry on the whole, spurring the Bitcoin to lose value extremely and causing incredulity towards crypto assets. Remarkably, Mt.Gox got bogged down in countless litigations. One of many shed the light on a fact which got the crypto realm taken aback: Mt. Gox turned out to be insolvent for a long period. Still, the lawsuits are being carried on, and creditors are still awaiting for a recovery of their assets.

The Mt.Gox case is undoubtedly a cornerstone of the crypto industry. Not only did the exchange shape the realm’s current state-of-things, but the profound scrutiny of it made a priceless contribution to the security measures crypto lenders are implementing in this day and age. Kraken, WhiteBIT, Coinbase and many other exchanges which provide top-notch immunity to all possible threats learned from the misfortunes and oversight of Mt.Gox, making it not a fundamental but a pivotal factor in establishing the crypto industry as we know it.

№2. The Ethereum DAO Hack (2016)

I bet every crypto enthusiast reading this article would remember The DAO (decentralized autonomous organisation), as it is a most renowned instance of rapid fame and downfall in the industry. Prior to its launch in 2016, The DAO raised roughly $150 million worth of ether (ETH) and was one of the earliest crowdfunding high-end projects on the basis of the newly emerged Ethereum blockchain.

While carrying out the crowdfunding campaign, the tokens’ sale was locked up until the needed amount of assets was collected and The DAO would begin its function. At that time, it hit astonishing digits of more than 11,000 investors drawn. Regardless of The DAO’s overwhelming popularity, it was still subjected to the concerns about weak spots in security, and a great bunch of computer scientists were profoundly specific about bugs in decentralized organisation’s code.

The developers attempted to fix the bug in The DAO, but the perpetrators were ahead of them, massively draining the funds from the wallet. The attack on The DAO put the Ethereum blockchain’s existence at stake. Nevertheless, the answer to the problem was worked out through a huge number of issues by Vitalik Buterin. Originally, he proposed a soft work of the Ethereum network and code alterations that would prevent the hackers from moving the stolen assets by blacklisting them. The reaction of the alleged attackers did not take long, and the situation turned out to be hopelessly tense. The hacker promised an impressive bribe of 100 BTC and 100 million ETH for Ethereum miners to hinder the soft fork, as was stated via The DAO’s corporative Slack channel.

Consequently, a more strict solution was proposed — a hard fork, which was eventually implemented after a great deal of a heated debate and effectively reapplied The DAO to another smart contract, allowing the investors to withdraw their funds.

The DAO hack is another case in point of how the crypto industry tackled the risks and dangers of its services and products as well as a reminder for users as well as the developers to prioritise security and safety of the assets.

№3. China’s Crackdown on Cryptocurrency (2017–2021)

China’s ban of cryptocurrencies is not really an unexpected precedent but it is the one that played a crucial part in the formation of the crypto industry and coining global regulatory policies and legal framework.

As a matter of fact, Chinese authorities banned certain crypto attributes throughout digital currency’s peak lifespan. The confinement of Bitcoin began in 2013 with its rising popularity around the globe and particularly in China. The adoption of cryptocurrency had been constantly increasing until The People’s Bank of China merely curbed it by issuing new regulations that did not prohibit Bitcoin on the whole but restricted Chinese banks from holding or transacting in virtual currencies. As a result, the access to crypto trading became more difficult.

Later, in 2017 while crypto survived the bull market, Chinese government bodies tackled ICOs and all the platforms carrying them out. The tendency of using smart contracts and corresponding blockchains as well as increased risks of ICO speculation created a solid basis for Chinese government bodies to ban all the platforms offering Initial Coin Offerings and to compulsory force many CEX’s to suspend operations. For instance, major crypto player Bitcoin China relocated itself to the UK and changed its name to BTCC as a result of such an initiative.

It is crucial to point out that as of 2021, the Chinese crypto ban covered the prohibition of mining, employment and trading operations, however it did not include specific measures against holding digital assets.

№4. Hotbit Collapse (2023)

On May 22, a major Hong-Kong based centralised crypto exchange with 5 million active users Hotbit announced that it suspended all its operations and shook up the crypto community with it. The management of CEX stated a range of core reasons for this to occur.

The first one is the deterioration of the functioning climate. Accordingly, in August 2022 Hotbit was forced to halt its operation due to facing a criminal investigation. In that time, a former Hotbit worker had begun the individual project and was accused of violating criminal law.

Remarkably, the bankruptcy of Hotbit was followed by two other major collapses: FTX going to the wall and Bittrex exiting the US crypto market, that indicated the up-and-down crypto realm and the effect on it due to government regulations.

Additionally, the centralised exchanges are presumably becoming cumbersome as they are implied to be a “highly complex of interconnected businesses that are difficult to comply with”.

The community’s reaction to Hotbit’s bankruptcy was both staggering and fierce. As a matter of fact, the better part of users faced the obstacles in withdrawing the assets. The complaints also focused on the vagueness surrounding refunding measures and the controversy between official statements and relevant state-of-things.

The Hotbit bankruptcy is another clear sign of a need to elaborate appropriate, non-discriminatory regulatory policies that would not allow to exceed the government’s authority.

№5. Elon Musk’s influence on crypto markets

It is no secret that Elon Musk, one of the richest and high-powered individuals in the world, is keen on seeking attention and taking advantage of its influence. The amount of times Musk pumped and dumped certain assets is literally countless, and all of them were made a great fuss about and always caused a tangible backlash. Thus, this paragraph is dedicated not to a single event but to a chain of newsbreaks systematised into a separate category. The story of Elon’s influence on crypto markets is pretty action-packed, hence the two of all the loudest cases are to be highlighted.

DOGE: Musk’s foremost passion

Elon had been spotlighting meme coin DOGE on his Twitter for a long time, spurring the interest to the token and consequently causing its value to increase. I am pretty sure you do remember Musk’s tweets and memes connected with the memecoin, but the most recent story is all about keeping the promises.

A couple years ago, Elon Musk was curious about whether the new platform should be created, and posed this question on Twitter. One user replied with an insightful answer: “Just buy Twitter and change the bird logo to a doge”. Musk answered with unconcealed endorsement: “Haha that would [be] sickkk”.

Elon indeed delivered on the promise: he bought Twitter and once changed its logo to doge, making Dogecoin by about 30%. Great case in point for meme coins’ debated volatility.

Musk’s speculation with Bitcoin

In 2021, Elon Musk expressed a seemingly strong support for Bitcoin and purchased $1.5 billion worth of it via Tesla. That resulted in a bull run in the market. However, later in May 2021 he reversed the vector and announced that Tesla would no longer accept Bitcoin as a payment method due to environmental concerns, triggering a downfall of the market rate.

Apparently, this case is another example of how the crypto market can be subordinated to the influence of prominent public figures.

Conclusion

The five events presented above had a considerable effect on the crypto realm, shaping its vector and tackling core challenges within the industry. The cases stated are ones of the pivotal in coining the perfect crypto world and learning from the mistakes.