When Billions Vanished: The Web3 Industry's Most Shocking Breaches of 2025

Reality often outpaces fiction, especially in digital assets. As we reflect on 2025, the Web3 space faced a reckoning unlike any before—not from technical mishaps, but from human choice. Where 2022 saw obvious mistakes like misrouted transactions, 2025 revealed something far more troubling: deliberate deception at every scale, from presidential cabinets to startup founders.

The events below demonstrate that as the industry matured, so did its schemes. Personal interpretation follows; readers are welcome to draw their own conclusions.

Presidential Meme Coin Collapse Exposes Political Corruption in Crypto

When a nation’s leader launches a token, what could go wrong? Everything, it turned out.

Early 2025 saw an explosion of political meme coins. TRUMP, backed by the U.S. president, launched without incident. But when Argentine President Milei promoted LIBRA on February 15, 2025, the situation spiraled differently. Within hours, the project team extracted 87 million USD in USDC and SOL from liquidity reserves, sending the token’s value down 80%—a textbook exit scam that shocked even hardened traders.

The rabbit hole deepened when investigators traced the manipulation. On-chain analysis revealed that MELANIA and LIBRA deployment addresses shared suspicious correlations and linked back to other failed projects (TRUST, KACY, VIBES). Market makers faced accusations of orchestrating the scheme. What’s worse, leaked evidence showed an insider within Milei’s administration received 5 million USD to facilitate the president’s promotional tweet.

The math was revealing: spend millions to extract 100 million USD in a coordinated pump-and-dump. The scandal raised an uncomfortable question—if presidents themselves participate in rug pulls, who can be trusted?

Impact Level: ★★★★★

Internal Betrayal: How a Trusted Developer Stole 50 Million USD

Stablecoin platform Infini experienced every company’s nightmare on February 24, 2025—a 49.5 million USD theft that wasn’t external.

Founder Christian acknowledged the breach immediately and promised full recompense. The team initially treated it as a traditional hack, even offering a white-hat bounty on-chain. But within weeks, the true culprit emerged: Chen Shanxuan, a highly-skilled engineer who had been trusted with the highest contract permissions.

Chen never transferred authority as required; he kept control. When his online gambling debts spiraled—despite earning millions annually—desperation led him down a path of theft. Former colleagues described his transformation from a respected technical educator to someone drowning in losses, borrowing constantly to chase more positions.

The incident highlighted a painful reality: raw technical talent means nothing without integrity. More broadly, the crypto space still struggles with proper governance and audit trails.

Impact Level: ★

When Voting Power Becomes Market Manipulation

On March 25, 2025, a prediction market platform experienced what’s known as an oracle attack—except the mechanism wasn’t sophisticated code, but voting manipulation by whale holders.

In a 7 million USD market predicting “Will Ukraine Accept Trump’s Mining Deal By April,” the outcome seemed settled. But as the deadline loomed, a user holding 5 million UMA tokens forced a reversal. They voted for an obviously incorrect result, and through their sheer holdings, intimidated other participants into following suit, ultimately “rewriting” what the market recorded as truth.

The platform acknowledged the error but refused to reverse it, claiming it fell within acceptable game rules. When governance tokens grant massive voting power to concentrated holders, the result isn’t decentralization—it’s plutocracy dressed in blockchain clothing.

Impact Level: ★★★

The 456 Million USD Question: Mismanagement or Theft?

On April 3, 2025, a complex legal saga involving TUSD reserves illustrated just how murky institutional crypto can become.

Justin Sun accused Hong Kong custodian First Digital Trust of illegally moving 456 million USD in TUSD backing to unauthorized wallets in Dubai. The Dubai International Financial Court froze the assets, finding evidence of trust violations. However, Hong Kong courts rejected Sun’s request for investigation.

The case turned on identity and jurisdiction. Sun is described as Techteryx’s (TUSD issuer) “ultimate beneficial owner,” yet avoids being listed as legal representative. First Digital Trust claimed they acted on unauthorized instructions from imposters, or alternatively, moved funds for legitimate investment purposes. When asked to verify, Sun refused direct legal acknowledgment of his role.

The most surreal moment: During an online court hearing, Sun appeared as “Bob,” hiding his camera until the judge insisted he turn it on. His reluctance to formally claim authority over the disputed assets raises questions about whether the entire situation involved genuine theft or strategic opacity.

No conclusion has been reached, and the 456 million USD remains contested.

Impact Level: ★★★★

The Fake Death That Wasn’t: Token Launch as Exit Strategy

On May 4, 2025, Zerebro co-founder Jeffy Yu livestreamed on a Solana-based token platform, after which rumors spread of his death. A Mirror post with the classic “If you’re reading this, I’m gone” opening appeared. An obituary service confirmed his passing.

But then came the reversal. Influencers exposed what they claimed was a “fake death plan”—a letter where Jeffy described coordinating his disappearance to escape harassment, doxxing, and extortion. He feared announcing a departure would crash his token and make things worse.

Lookonchain then discovered something damning: on May 7, a wallet possibly linked to Jeffy sold 35.55 million ZEREBRO for 8,572 SOL (roughly 1.27 million USD), then transferred significant funds to the LLJEFFY developer wallet.

So was Jeffy fleeing genuine threats, or orchestrating a profitable exit by staging his death? The blockchain doesn’t judge intentions.

Impact Level: ★★★

When a Blockchain Decides It Knows Better Than Its Rules

On May 22, 2025, Sui’s largest DEX suffered a precision error, and hackers extracted 223 million USD. Within two hours, Sui announced 162 million USD was “frozen.”

The mechanism: Sui validators collectively decided to ignore transactions from the attacker’s address. By leveraging the 2/3 consensus model, they simply prevented fund movement—a network-level intervention that raises philosophical questions about immutability and decentralization.

When engineers were asked about recovering the funds, the story shifted. Sui’s team apparently requested validators deploy a patch, but validators denied receiving such requests. The contradiction remains unresolved.

The uncomfortable question lingers: if the network can freeze funds for criminals, why wouldn’t it freeze yours if regulators demanded it?

Impact Level: ★

The Pharma Company That Tried to Become Blockchain

A pharmaceutical company listed in Hong Kong announced an acquisition structure that was essentially a backdoor listing for blockchain project Conflux—except reversed.

Starting April 2025, Conflux founders became executives at Leading Pharma Biotech. By July, the company announced intentions to acquire Conflux assets. In September, it rebranded as Xingtai Chain Group, seemingly riding the Web3 wave.

The stock price spiked, then collapsed. A 60 million HKD fundraising plan fell through due to unmet conditions. By November 17, 2025, the Hong Kong Stock Exchange ordered trading suspended, citing failure to maintain listing standards.

The entire maneuver proved that even financial structures can be theater.

Impact Level: ★★★★

The Perpetual Entrepreneur’s Latest Scheme: Buying Crypto With OPM

Jia Yueting’s electric vehicle company, known for quarterly revenues in the tens of thousands against losses in the hundreds of millions, announced it was entering crypto in August 2025.

Faraday Future launched a “C10 Index” and “C10 Treasury,” designed to purchase 500 million to 1 billion USD in cryptocurrency assets—after raising the money to do so. The strategy: use other people’s capital to buy assets, collect fees, and pursue sustainable returns through staking.

Within the same period, Jia brokered a 30 million USD investment into a therapeutic company transitioning to crypto, serving personally as advisor. He also negotiated partnerships with major auto manufacturers on technical matters.

The sheer audacity to run a series of loss-making ventures, then pivot into managing other people’s crypto assets, demonstrated either extraordinary confidence or a complete understanding of how capital flows despite results.

Impact Level: ★★★★☆

When Founders Drain Their Own Projects

On November 5, 2025, xUSD suffered massive losses, and investigations revealed something worse brewing at USDX.

Analyst 0xLoki found that despite USDX stablecoins being redeemable at face value within one day, suspicious addresses began draining lending pools across Ethereum’s Euler platform, accumulating bad debt.

One of those addresses traced directly to Flex Yang, USDX’s founder.

The implication: if the founder is desperate to cash out immediately rather than wait for normal redemption, what does that signal about the project’s health?

Flex Yang’s history compounds the concern. He also founded Babel Finance (which faced insolvency during the 2022 downturn and still hasn’t recovered) and HOPE (which disappeared after its lending product was exploited).

When the same founder’s projects repeatedly face crises, the question shifts from bad luck to pattern.

Impact Level: ★★★

Venture Capital Discovers the “Safe” Investment: Refund Guarantees

Layer 1 blockchain Berachain disclosed that its Series B included a side agreement with venture fund Nova Digital: if the token underperformed within one year, the fund could demand a full refund of its 25 million USD investment.

This meant Nova’s exposure was capped at potential upside, with downside virtually eliminated—transforming “investment” into a risk-free loan. Other Series B investors claimed they weren’t informed of this preferential treatment.

Berachain’s defense noted that Nova proposed leading the round under these terms, framing the clause as a compliance requirement rather than a guarantee against market losses. They emphasized that Nova remained a top holder and had increased BERA positions during volatility rather than exiting.

Yet the asymmetry remained: everyone else bore market risk; one investor bore only regulatory risk.

When venture capital requires downside protection, it ceases being venture capital. It becomes another form of insider favoritism.

Impact Level: ★★★

The Year of Reckoning

2025 revealed that Web3’s maturation brought not cleaner governance, but smarter exploitation. Presidential rug pulls, founder theft, oracle manipulation, and frozen assets don’t stem from technical limitations—they stem from human choices made within imperfect systems.

The industry moves forward, but the lesson remains: in markets without guarantees, alignment of incentives matters more than ideology.