2025 Web3 "Crash Guide": From Behind-the-Scenes Manipulation to Governance Collapse

Are there still people who believe that Web3 is safer than traditional finance? A series of events in 2025 have given us a painfully difficult answer.

Over the past three years, Web3 has gradually evolved from basic mistakes like “sending transfers to the wrong address,” but human nature—the biggest variable—continues to break through bottom lines. This time, what we see is not just technical vulnerabilities, but systemic risks surfacing.

Power Games: Whoever controls the discourse controls the market

The domino effect of political figures promoting Meme coins

At the beginning of the year, a wave of Meme coin issuance driven by presidential-level figures swept through the crypto space. On the surface, it appeared to be individual actions, but behind the scenes, there was an organized manipulation network.

In one typical case, a token issued by a politician experienced an 80% crash within hours of launch. On-chain data tracking teams analyzed fund flows and found at least three related addresses behind multiple tokens, involving several historical Rug Pull projects. Even more shocking, insiders revealed that just a $5 million bribe could facilitate a presidential tweet, which indirectly led to over $100 million in market funds being harvested.

The core issue: When the power center discovers that crypto assets can be quickly liquidated, rules begin to distort. This is not just a scam problem but a direct infringement of the market by those in power.

Oracles become “tools for rewriting reality”

In March, a well-known prediction market experienced a bizarre reversal. Near the deadline, an event with an almost zero probability suddenly was voted to have a 100% chance of happening. The reason was simple: a whale holding 5 million governance tokens cast a dissenting vote, enough to overturn the decisions of all retail investors.

After this turmoil, although the official team optimized governance, the core problem remained unresolved—the oracle was still ultimately controlled by the largest token holder. How is this fundamentally different from “whale manipulation” in traditional finance?

Internal threats: the complete collapse of trust chains

$49.5 million insider theft case

The digital bank Infini’s “hacker incident” was actually a carefully staged internal scheme. The accused “hacker” was a technical backbone within the company, holding the highest contract permissions. He was supposed to surrender these rights after project completion but secretly kept a backdoor for himself.

Ironically, his motive was addiction to contract trading and massive online debts. A tech talent earning millions annually, ultimately turned to crime due to gambling addiction. After the incident was exposed, Infini’s founder promised full compensation immediately, but it couldn’t undo the market’s doubts about risk management.

The broader issue: When a company’s permission structure is poorly designed and employee risk monitoring is lacking, internal threats can be more deadly than external hackers.

The true face of stablecoins

A $456 million black hole of funds

A stablecoin project’s reserve funds “disappeared” from a trust institution, leading to a lawsuit in Dubai courts. The climax was when a person claiming not to be the legal representative suddenly appeared at the court hearing and turned on the camera—he was the real person behind the project.

This absurd drama exposed the biggest pain point in the stablecoin field: the fund custody chain is too long, and the power relationships are too blurry. The project claimed misappropriation, the custodian claimed authorized use—who is lying no longer matters because users have learned a lesson: stablecoins are unstable.

Another stablecoin controversy involved the project founder using related addresses to rapidly cash out on lending platforms, draining all liquidity pools. This person’s track record includes two failed projects, each accompanied by similar “risk control issues.”

From funding promises to market traps

The disastrous reverse merger

A public chain project attempted to go public on the Hong Kong Stock Exchange by acquiring an existing listed company. Initial stock prices soared, and fundraising was nearly successful. But then the funding chain broke, stock prices plummeted, and trading was suspended for failing to meet continuous listing requirements.

This operation revealed a serious misunderstanding: many project teams lack a proper understanding of market regulation, confusing fundraising ability with operational capacity.

The truth behind VC compliance clauses

A Layer1 project was exposed for offering “zero-risk exit” clauses to major investors—something akin to a scam in traditional finance. Investors bought tokens at $3 each and had the right to demand a full refund within a year. It was essentially saying: “I bet you will fail, but if you do, I won’t lose.”

Even worse, other Series B investors only learned about this clause after the incident was exposed. This is not just unfair but a direct destruction of information symmetry.

The limits of human nature

The ultimate version of a creative persona

A co-founder launched a “fake death scandal.” A live broadcast of a suicide video quickly spread, triggering mourning. But days later, an automated post revealed that it was a staged “death” to escape long-term harassment and extortion—a carefully planned performance.

Subsequent investigations found that within days of the “death,” related wallets transferred large amounts of the project’s tokens. Was he truly forced into despair, or was this a cover for cashing out? No one can tell anymore.

The new moves of “money-making professionals”

An entrepreneur previously involved in an electric vehicle project re-emerged in 2025, this time targeting crypto assets. The company announced plans to raise hundreds of millions of dollars to buy Bitcoin, Ethereum, and other mainstream coins, successfully attracting funding. Later, they announced collaborations with automakers and shifted to other fields for financing… Regardless of the outcome, the art of fundraising was played to the extreme here.

Systemic risk signals

When we examine these events one by one, several common points emerge:

Over-concentration of governance power—whether through oracle voting or foundation decisions, a few with large resources can overturn the majority.

Information asymmetry—from concealing investment terms to obscuring power structures, information barriers are everywhere.

Confusion of power and permissions—the boundaries between project founders, investors, and technical teams are increasingly blurred.

Lack of risk control culture—repeated similar issues without systemic improvements.

Conclusion

By 2025, Web3 is no longer just a matter of “technical errors,” but a problem rooted in “human design flaws.” Calls for stricter regulation are rising worldwide, reflecting, to some extent, the market’s despair over self-healing capabilities.

In such an environment, choosing which projects to participate in and which founders to trust is becoming a survival skill more important than technical analysis.