Ten lessons from the main Web3 scandals of 2025: when reality surpasses imagination

If you think 2022 was extravagant, 2025 will prove that Web3 continues to teach us harsher lessons than any novel. Three years after the previous report on strange events, human nature – the greatest playwright – has outdone itself again. This time, however, the errors are no longer simple misdirected transfers, but elaborate schemes, power conflicts, and systemic failures. Below are ten episodes that reveal the true face of the industry.

1. When politics funds crime: the presidential meme coin with 100 million

The LIBRA case: a nested scheme within the government

The beginning of 2025 saw the launch of the TRUMP meme coin to celebrate the new American president. Subsequently, Trump’s wife (MELANIA) and Argentine President Milei also promoted their respective tokens on January 20 and February 15 (UTC+8). While MELANIA’s launch was standard in the meme coin world, LIBRA’s revealed a disturbing reality.

A few hours after launch, the LIBRA team withdrew 87 million USDC and SOL from the liquidity pool, causing a price crash of over 80%. This “rug pull” triggered an investigation that uncovered unexpected connections: Bubblemaps found that the deployment addresses of MELANIA and LIBRA shared common ownership, linked to previous rug pull projects like TRUST, KACY, and VIBES.

Even more scandalous: inside Milei’s government operated a “mole” who received 5 million dollars to persuade the president to promote LIBRA. A “commission” to collect over 100 million: an incredibly profitable deal. Kelsier Ventures, designated as market maker, has been described by analysts as a “family criminal group.”

Verdict: When capital joins politics for an open robbery, the inevitable question arises: who can we still trust?

2. The insider who steals 50 million for gambling: the collapse of technical trust

The Infini case: when a developer becomes a traitor

On February 24, 2025, Infini – a digital platform for stablecoins – was robbed of $49.5 million from the Morpho MEVCapital Usual USDC Vault. Founder Christian immediately admitted the incident and promised full reimbursement. The team tried to negotiate with the attacker, offering 80% of the funds in exchange for reconsidering legal action.

But here comes the real stupidity: the alleged “hacker” was not an external criminal, but Chen Shanxuan, a highly trusted internal developer. Chen had the highest privileges on contracts managing both company and client funds. After completing development, he was supposed to transfer controls to the team, but instead kept them secretly.

Subsequent investigation revealed Chen suffered from leveraged gaming addiction: despite earning millions annually, he constantly borrowed to trade with leverage, accumulating unsustainable debts. For Colin Wu, Chen was considered a model of technical knowledge sharing; his fall was a deep loss.

Lesson: Starting a business is fundamentally different from investing. When Web3 entrepreneurs move from “monetizing knowledge” to actual operational work, they are often not yet mature enough to handle the responsibility involved. And a golden rule: unless you are a recognized genius, stay away from derivatives.

3. The manipulated oracle: when a whale rewrites history on Polymarket

How a whale “flipped the truth” by investing 5 million in UMA

On March 25, 2025, Polymarket – the prediction market platform famous during the US elections – faced an oracle attack. In the market regarding “Will Ukraine accept Trump’s mining deal before April?”, the probability of “Yes” was nearly 0%, but suddenly hit 100%.

The culprit? A UMA whale holding 5 million tokens voted for the wrong outcome, flipping a $7 million market. The mechanism is simple but devastating: when Polymarket needs a result, it emits a data request; the proposer deposits 750 USDC as collateral. During the challenge period, other users can oppose by depositing the same amount. Finally, all UMA holders vote to determine the correct outcome.

In this case, the whale voted for a manifestly false result, influencing others who, fearing they couldn’t compete, conformed to its vote. Polymarket acknowledged the error but classified it as “part of the game rules,” refusing to change the result. Only in August 2025 did UMA introduce a whitelist limiting proposers to approved entities by Polymarket, but without altering the oracle’s core governance.

Underlying issue: Can decentralization be considered such if a single entity can manipulate the result? As a new “truth arbiter,” ignoring a blatant oracle error is a design flaw that warrants deeper reflection.

4. The mystery of 456 million TUSD: appropriation or procedural error?

Justin Sun vs. First Digital Trust: a legal battle revealing a complex intrigue

On April 3, 2025, Justin Sun held a conference in Hong Kong accusing First Digital Trust of illegally transferring $456 million from TUSD reserves. However, the Hong Kong court dismissed the request. A month earlier, Dubai International Financial Centre (DIFC) issued a global freeze order for the same amount, citing trust violations linked to Techteryx, the TrueUSD issuer.

The structure is intricate: Techteryx (a company registered in the British Virgin Islands) acquired TrueUSD at the end of 2020 and manages its operations. Justin Sun is formally the “advisor for the Asian market,” but documents from DIFC 2025 describe him as “ultimate beneficial owner” – meaning he controls Techteryx but is not the official legal representative. This ambiguity caused significant consequences.

According to Sun’s narrative: from 2021 to 2022, TrueCoin (the original trustee based in Hong Kong and the Cayman Islands) created a secret channel for fund exit, collaborating with First Digital Trust and others. Sun claims the reserves were falsely transferred to Aria DMCC (Dubai), a company controlled by Matthew Brittain’s wife (owner of a Cayman fund), without Techteryx’s authorization.

From First Digital Trust’s perspective: an “authorized representative” of Techteryx, Lorraine, requested the transfer, but FDT, distrustful of Lorraine and without a request from the true controller, chose to transfer funds to Aria DMCC (while remaining connected), arguing that this new allocation generated equivalent yields and that they would return the funds if requested by the verified true controller.

The most disturbing twist: during an online hearing on Techteryx, a certain “Bob” appeared instead of Sun. The judge asked to activate the webcam, revealing that Bob was Justin Sun himself. This behavior fueled community doubts: even if FDT did not transfer the funds as agreed, Sun’s avoidance of being the official legal representative – thus evading direct responsibility – suggests the picture might be more ambiguous than it seems.

Unresolved dilemma: Maybe FDT exploited the confusion to appropriate the funds; or perhaps, as they claim, acted for safety. What’s certain is that when intelligence turns against its user, the result is rarely uplifting.

5. The “fake death” of Jeffy: marketing, escape, or both?

The co-founder of Zerebro stages his farewell to disappear from the spotlight

On May 4, 2025, Jeffy Yu, 22, co-founder of Zerebro, streamed live on pump.fun. Later, many users claimed “Jeffy Yu committed suicide live,” sharing videos of the alleged death on Twitter. The community mourned, but the authenticity of the video was never verified, fueling suspicion of a marketing stunt.

A key element: just before the broadcast, Jeffy published an article about “legacy memecoin,” a new concept where the developer promises to buy but not sell the token, which is then locked on the blockchain after death as “digital inheritance.” Curiously, on that very day, the LLJEFFY token was launched on pump.fun.

On May 5, the Legacy platform published an obituary (clearly referring to Jeffy), and the next day, a trigger-based article appeared on Mirror with the classic phrase: “If you’re reading this, it means I’m dead…” The article mentioned LLJEFFY as his “last work of art” and criticized greed: “When I became rich and famous online, everything that mattered collapsed: friends, family, relationships, co-founders. Nothing was pure anymore.”

The revelation came from KOL Irene Zhao and DeFi developer Daniele: Jeffy orchestrated a deliberate “fake death.” In a leaked letter, Jeffy confessed to being a victim of harassment, scams, and blackmail by former partners, with his address and phone number repeatedly made public. The harassment included insults about race, gender, and personal success. Jeffy wanted to disappear but feared a public announcement would crash ZEREBRO, worsening the situation.

The game-changer: on May 7, a wallet linked to Jeffy sold 35.55 million ZEREBRO for 8,572 SOL (about $1.27 million), then transferred 7,100 SOL to LLJEFFY’s developer wallet. Was it a financial escape disguised as tragedy, or a genuine quest for security and anonymity?

Open question: Betrayals and threats are part of business. When you participate in a space without guarantees, you must accept it’s a matter of luck versus misfortune, life or death.

6. Sui blocks attacker’s funds: centralization becomes “utility”?

How the network froze $162 million stolen in two hours

On May 22, 2025, Cetus – the largest DEX on Sui – was hacked due to a precision error in the code, with a theft of $223 million. Remarkably, Cetus announced the freezing of $162 million of the stolen funds in just two hours.

How was this possible? Sui requires 2/3 consensus of validators to execute a transaction. In this case, 2/3 of nodes chose to ignore transactions from attacker addresses, preventing the attacker from transferring funds. About $60 million moved to Ethereum before the freeze, while the rest remained trapped on Sui.

Later, Solayer engineer suggested that the Sui team was requesting validators to implement a recovery code to return funds without the attacker’s signature. However, validators denied receiving such a request.

Provocative reflection: Discussing centralization vs. decentralization is now stale. The real question: if I mistakenly send funds on Sui, will they help me recover? This “exception” deserves deeper reflection on what true decentralization means in 2025.

7. Failed reverse merger of Conflux: when listing becomes a nightmare

How hope for traditional market access turned into trading suspension

On July 1, 2025, Leading Pharma Biotech announced a reverse merger with Conflux, aiming to list via acquisition of an already listed company. Conflux founders Long Fan and Wu Ming had already become executive directors of Leading Pharma in April.

The structure looked promising: in August, the company announced issuance of 145 million shares to raise HKD 58.82 million for blockchain development. At the end of September, it changed name to Star Chain Group, riding the Web3 wave.

Initially, the stock rose, but the crash came on September 12, when the $60 million fundraising plan failed to meet certain conditions by September 11. After the name change, the stock continued to plummet. On November 17, 2025, HKEX ordered trading suspension from November 26, doubting the company’s continued listing requirements.

Final irony: Although Hong Kong publicly supports Web3 development, the suspension of Star Chain Group suggests market standards have not been relaxed, even for the most promising projects.

8. Jia Yueting enters crypto to fund the future (of Faraday)

From car driver to crypto manager: the stubborn entrepreneur’s latest gamble

On August 17, 2025, Jia Yueting – behind Faraday Future, the electric car company with minimal quarterly revenue and record losses – announced official entry into crypto with the launch of “C10 Index” and “C10 Treasury” product.

The C10 index tracks the top ten global cryptocurrencies (excluding stablecoins), including Bitcoin, Ethereum, and Solana. The C10 Treasury strategy involves an 80% passive + 20% active approach to ensure sustainable yields. Faraday announced plans to raise $500 million to $1 billion in crypto, with an initial tranche of $30 million to start immediately.

Long-term goal? Expand the portfolio to $10 billion, leveraging staking yields for compounded growth. Jia has already raised funds and, through Faraday, invested $30 million in Qualigen Therapeutics to facilitate the transition to crypto assets.

Recently, Jia also announced a collaboration with Tesla: new Faraday models will connect directly to Tesla’s charging network, and Jia expressed interest in collaborating on Full Self-Driving technology.

Final note: Jia truly possesses extraordinary capabilities, hard to imitate. His attempt to fund his empire through crypto suggests that creative desperation and boldness are still alive in 2025.

9. USDX: when the founder drains pools and disappears

The “borrowing and vanishing” team reveals a hidden curriculum

On November 5, 2025, after xUSD suffered heavy losses, user 0xLoki discovered that, despite just waiting a day to redeem stablecoins used to mint sUSDX, some addresses drained all lending pools on Euler using USDX and sUSDX as collateral, ignoring annual rates over 30%.

USDX is issued by usdx.money, which raised $45 million at a valuation of $275 million at the end of 2024. Two suspicious addresses started receiving large amounts of USDX from late October, systematically draining liquidity via loans and DEX, leaving many platforms with unrecoverable credits.

Most alarming: one address is directly linked to Flex Yang, founder of usdx.money. If the founder himself quickly withdraws funds, something is clearly rotten. After the analysis was published, USDX suffered a severe depeg, confirming suspicions.

On November 8, Stables Labs announced they would assist affected users “based on available resources,” opening a registration channel – then silence.

Digging into Flex Yang’s background: he is also founder of Babel Finance and HOPE. Babel faced insolvency issues during the 2022 bear market, entering ongoing restructuring; HOPE, after an attack on its lending product, has practically disappeared from the market radar.

Recurring lesson: History teaches that no one learns from history. Entrepreneurs fail and try again, but when the same risk management mistakes recur, it’s hard to tell if it’s misfortune or deliberate intent.

10. Berachain grants VCs a “risk-free” buyback clause: a dangerous precedent

The Nova Digital fund gains full capital protection, raising questions about fairness in fundraising

On November 25, Unchained revealed that Berachain granted Brevan Howard’s Nova Digital a special buyback clause in Series B, making a $25 million investment virtually “risk-free.” Berachain co-founder Smokey the Bera denied the report’s accuracy, emphasizing that Brevan Howard remains a major investor and that the clause is only a safeguard if the token is not launched.

Details disclosed: Nova Digital invested $25 million in March 2024, acquiring BERA at $3 per token. As co-lead of Series B, the fund obtained, via side agreement, the right to request full buyback within one year of the Token Generation Event. If BERA’s price underperformed, Nova Digital could demand full refund by February 6, 2026.

Another controversial point: other Series B investors were not informed of this clause. Two anonymous investors revealed they were not made aware, raising questions about violation of disclosure rules under securities laws.

Final verdict: If Berachain’s behavior is confirmed, it would represent a reputation exploitation of Nova Digital, bordering on outright fraud. The provocative question remains: do you still believe Web3 does not need stricter regulation?

Conclusion: lessons Web3 continues to offer

From presidential meme coins to disappearing founders, from legal mysteries to failed reverse mergers, 2025 has shown that the crypto industry still has the capacity to surprise and dismay. If 2022 taught us not to send funds to wrong addresses, 2025 teaches that absurdity has simply evolved: from trivial technical errors to complex human schemes, orchestrated frauds, and manipulable systems.

The real lesson? It’s not that Web3 is irredeemably corrupt. It’s that without transparency, accountability, and solid governance structures, even the best projects can collapse under the weight of human imperfection.