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15 Times People Lost Fortunes in Crypto

31 March 2021

Crypto-currency Is the New Money. Read on, if You Want to Learn Lessons About What Not to Do While Dealing With Crypto.

We’ve all lost money. It’s a hard pill to swallow. And we know there is absolutely no way of getting our money back. However, with Bitcoin or crypto, it’s so much worse because you know the money is there, but completely irretrievable because you’ve forgotten a simple password. Ouch.

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With that done, let’s jump straight into the article.

1

Peter McCormack – $1.2 Million Loss

McCormack was doing quite well with his advertising agency in London. He had a team of 35 people working for him with a decent turnover. However, when the company folded, he turned to Bitcoin.

It was a case of too much too soon, and McCormack said he became over ambitious. His dream was to own his local football club and was aiming to save 5 million pounds. And while his Bitcoin was gaining value, he was spending the profits as quickly as they came in.

Then the Bitcoin bubble burst and McCormack lost around $1.2 million. He was fortunate that it didn’t break him and he now runs a successful podcast that he absolutely loves.

2

Stefan Thomas – $220 Million

Programmer, Stefan Thomas has been locked out of his Bitcoin wallet. Thomas had 7,002 bitcoins stored on a secure hard drive and he can’t access them because he forgot the password.

The value of the inaccessible Bitcoin is said to be around $220 million. The coins were stored safely with an IronKey device that gives you 10 chances to enter your password correctly. Thomas had tried several times, with no luck and the last update in January 2021, was that he had 2 attempts left.

He’s made peace with the potential loss, but we’re not sure we have. It’s a shame there is no prompting question, like what is the name of your first pet? Or what was your favourite toy as a child?

Fortunately, you don’t need a password to subscribe to our channel – so be sure to do so Aluxers!

3

Anonymous German Man – $500,000

In our video, 10 Companies that hold the most Bitcoin, we told the story of the German man who lost half a million dollars’ worth of Bitcoin. As we said, “A poor guy in Germany lost half a million dollars’ worth of bitcoin after believing a Tweet posted by a Musk imposter, promising to double his money. With a clock pushing for urgency, the man gave away all his bitcoin and then had to break the news to his wife…”

We don’t know his name, and we’re guessing he’d like to keep it that way.

4

James Howells – $56 Million

His interest in Bitcoin began in 2009 and by 2013, James Howells had mined 7,500 Bitcoin. At this time, he sold his computer on eBay for spare parts but kept the hard drive that had his mining information stored on.

Around the same time, Howells did a big clean-up of his house and accidentally tossed the drive. The drive landed up in a landfill in Newport, South Wales along with 350,000 tons of other waste. Despite his best efforts, he didn’t get permission to search for the missing drive. In his words, “s**t happens.”

5

Mathew Mellon – $500 Million

Banking and money are in the family of Mathew Mellon, as he is a direct descendant of Judge Thomas Mellon who founded Mellon Bank in 1869. Mathew Melon was chairman of the New York Republican State Committee’s finance committee.

He took an avid interest in crypto and spent around $2 million on Ripple. Mellon’s XRP is worth around $1 billion.

But Aluxers, there’s one massive problem. Mellon died in Mexico in 2018 and had stored his private keys in cold wallets across the country. To this day, the coins are still exactly where he left them.  

6

David Stubley – $475,000

Founder of 7 Elements cyber-security firm, Stubley is a perfect example of what not to do when trading crypto.

Stubley had his bitcoin wallet accessed by fraudsters by clicking on a link that took him phishing. Of the 84 bitcoin he had, the thieves left him with 1. When this happened in 2017, their value was $475,000.

Apparently, it was possible to trace where the bitcoin went, ending up in a wallet containing $15 million in currency. Although the fraudsters could not be identified, the wallet was frozen which meant the funds could not be accessed.

The funds would be worth over $3 million today.

Aluxers, if you want to ensure this does not happen to you, we suggest you check out our Bitcoin Essentials resource that we believe is the best for blockchain and bitcoin knowledge, especially if you’re starting out.

Got to alux.com/bitcoin and enroll now!

7

Mark Frauenfelder – $30,000

We get it, 30k isn’t much in comparison to others on this list, but it’s a tidy sum of money and most people will feel the pinch of losing it.

Co-founder of Boing Boing, Mark Frauenfelder, gives the age old “blame the housekeeping service” for the loss of his password, but he should have been more careful. He admits that he wrote the passphrases and PIN down on an orange piece of paper, left it lying around, and housekeeping tossed it.

Frauenfelder was so desperate, he even tried hypnotherapy to remember the digits. Long story short, he’s one of the few lucky ones. Trezor, the hardware wallet where he was storing his coins, did an upgrade. He followed a Reddit thread and found out that people were able to exploit the update. It took a lot of effort, but he successfully managed to retrieve his pin, passphrase and his 7.4 bitcoins!

8

The Winklevoss Twins – $600 Million  

Before you lose your sh*t, the Winklevoss Twins are worth around $1 billion each! Tyler and Cameron Winklevoss got their claim to fame when they sued Mark Zuckerberg, accusing him of stealing their idea for the social media platform. They won a $65 million settlement from the lawsuit.

It’s said that the twin’s bought 120,000 bitcoins – which is roughly 1% of all the coins in circulation. You know how the figures fluctuate, but at one stage their Bitcoin was worth $1.3 billion, while others suggest as high as $2.34 billion. They’re now worth around $720 million.

It doesn’t seem an amount that will plague the brothers much. Tyler and Cameron Winklevoss told CNBC that they believed bitcoin could reach as much as $500,000 within a decade.

9

Gerald Cotten– $190 Million

The story of Gerald Cotton has many holes. It’s secretive, mysterious and needs a super sleuth to solve. Vaityfair.com starts the tale like a novel…

“When Canadian blockchain whiz Gerald Cotten died unexpectedly last year, hundreds of millions of dollars in investor funds vanished into the crypto ether. But when the banks, the law, and the forces of Reddit tried to track down the cash, it turned out the young mogul may not have been who he purported to be.”

Cotton was the founder and CEO of Quadriga, Canada’s dominant Bitcoin exchange. He ran the company from his MacBook Pro. Cotton struggled with Crohn’s disease and in 2018 was said to succumb to complications from the disease. There is speculation there is more to the.

Cotton had crypto worth $190 million owing to 115,000 customers and to date, the data has not been accessed and the case remains unresolved.

10

Alex Jones – $562 Million

You might recognize the name and the face, and that’s because Alex Jones is the host of Infowars and the Alex Jones Show.

Jones is no stranger to a little conspiracy theory, so he would have loved the story about Gerald Cotten.

He was given a laptop by bitcoin proponent Max Keiser containing 10,000 bitcoins. At the time, Jones was super skeptical of bitcoin and crypto, so, he didn’t give it much attention.

When bitcoin started gaining momentum, he tried to find the laptop… and of course, it’s gone. Never to be seen again.

11

Elon Musk

In our video, Top 10 Companies that Hold the most bitcoin – we mentioned that Tesla owns $1.5 billion worth of Bitcoin.

And Aluxers, while we can’t provide you with an exact figure, Musk lost his position as the world’s richest person when he lost over $15 billion net worth in one day! This was due to Tesla shares plummeting more than 10% after they invested $1.5 billion into Bitcoin.

12

Derek Rose – $10 Million

In his own words, Rose said, “I lost more money in Bitcoin than most people will earn in a lifetime.”

Rose was interviewed by Katie Kenny and Laura Walters on their podcast, Superfad. He wanted listeners to know that he wasn’t looking for pity or sympathy, and the money he lost was purely his own.

Things happened quickly for Rose. He converted $70,000 into nearly $3 million by placing leveraged bets on two crypto currencies called EOS and Iota.

He started off strong and patient and had a debit order going off his account investing in a quarter bitcoin at a time. But as the bottom line kept increasing so quickly, he decided to cash in everything and take a risk… and that’s when things went awry.

He’s learnt his lessons and intends to try again although this time armed with knowledge and experience.

13

Amily – $120,000

We don’t know much about Amily, except that she’s about $120,000 down in her net worth than she used to be, and all because of a silly error. She was keeping the files of keys for her 10 bitcoins in a folder which she accidentally deleted.

Hopefully she can take to heart what Satoshi Nakamoto said about lost bitcoin, “Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.”

14

Chris Larsen – $44 Billion

Aluxers, we mentioned Ripple a little earlier and Chris Larson is one of the co-founders of the company. By creating a coin that people trade, Larson began 2018 with roughly $60 billion. At this stage, the coin was trading at $3.10, but that plummeted to .45 cents, resulting in a loss of $44 billion.

Ripple is not a crypto as valuable as Bitcoin or Ethereum and at the time this article was written was trading at .49 cents.

Fortunately, the loss didn’t impact Larsen severely, but Ripple has a long way to go to be on par with Bitcoin or Ethereum.

If all these stories have scared you about bitcoin and made you skeptical, check out 10 Biggest Misconceptions About Bitcoin.

15

Another Anonymous German Man, With a Twist

This story is slightly different, because local authorities in Germany have confiscated $84m in bitcoin from an anonymous man. But there’s one problem… the man won’t give up the password.

The man in question was jailed for 2 years. His transgression? Secretly installing software on other computers that mined bitcoin on his behalf. His lawyers are saying he’s forgotten the password, and cannot retrieve the money, like so many others before him… and let’s be honest, how can they prove him wrong?

Question:

Aluxers, what is the most amount of money you’ve lost and how did you lose it? We’d love to hear from you!