Module 16: Postmortems
Why Study Failures
Chapter 1 of 12 · about 3 minutes
1.1 Other people's expensive lessons
Hash had a habit that Mint and Node had noticed through the whole series. Whenever a concept came up, Hash had a story about someone who'd lost money ignoring it.
"Why do you always tell the disaster stories?" Mint asked.
"Because they're the cheapest education there is," said Hash. "Someone else already paid for the lesson. The least we can do is learn it."
In engineering and aviation, a postmortem is a structured review of a failure: what happened, why it happened, what warning signs were visible, and what should change. Crypto has had many failures, some of them among the largest financial collapses of the past decade. This final module studies the most important ones.
1.2 How each case study works
Every chapter follows the same structure:
| Section | Question |
|---|---|
| What it was | What did the project or company do, and why did people trust it? |
| What happened | How did it fail, step by step? |
| Warning signs | What was visible beforehand, to people who knew what to look for? |
| Aftermath | What happened to users, founders, and the industry? |
| Lessons | Which earlier modules would have helped, and how? |
The goal isn't to mock the people who lost money. Many were intelligent, careful people. The goal is to recognise patterns, because crypto failures repeat in recognisable forms.
1.3 The cases in this module
| Chapter | Case | Year | Main failure type |
|---|---|---|---|
| 2 | Mt. Gox | 2014 | Exchange custody and security |
| 3 | The DAO | 2016 | Smart contract bug |
| 4 | ICOs and Ponzi schemes | 2017 to 2018 | Fraud and hype |
| 5 | QuadrigaCX | 2019 | Key-person risk and fraud |
| 6 | Terra and Luna | 2022 | Algorithmic stablecoin design |
| 7 | The 2022 lender collapses | 2022 | Opaque leverage and contagion |
| 8 | FTX | 2022 | Misuse of customer funds |
| 9 | Major hacks, 2022 to 2026 | 2022 to 2026 | Security and operational failures |
| 10 | The October 2025 liquidation cascade | 2025 | Leverage and market structure |
| 11 | Common patterns | All | Synthesis |
| 12 | Your personal postmortem habit | Applying the lessons |
1.4 A note on facts and fairness
These chapters describe real events and, in several cases, criminal convictions. They're based on publicly reported information available as of October 2026. Legal proceedings, bankruptcy distributions, and recoveries were ongoing in some cases, so check for updates.
Where people were convicted, the chapters say so. Where matters were disputed or unresolved, the chapters say that too.
1.5 The question to keep asking
As you read each case, ask yourself one question:
"If I'd been there, with everything I've learned in this series, which warning signs would I have noticed, and what would I have done?"
"So it's like a final exam," said Mint.
"A final exam where the answers have already cost other people billions," said Hash. "Pay attention."
1.6 Try it yourself
Before reading the case studies, write down the five warning signs you think are most common in crypto failures, based on everything you've learned. At the end of the module, compare your list with Chapter 11.
Key takeaways from this chapter
- A postmortem is a structured review of what failed, why, what warning signs existed, and what should change.
- Crypto's failures repeat in recognisable patterns, making them valuable to study.
- Each case study covers what it was, what happened, warning signs, aftermath, and lessons.
- The cases span exchange failures, smart contract bugs, fraud, stablecoin collapses, lender failures, hacks, and leverage cascades.
- The key question for each case: which warning signs would you have noticed, and what would you have done?