The last decade gave birth to many powerful startups that promised to change the world. Some succeeded, but others collapsed in scandals that shook investors, employees, and customers. These stories show how hype, unchecked power, and weak governance can destroy billions in value. Below is a detailed look at the biggest startup scandals from the past ten years, explained in simple words without technical jargon.
FTX – The Crypto Giant That Exploded
FTX grew fast and became one of the largest cryptocurrency exchanges. Founder Sam Bankman-Fried impressed investors, celebrities, and politicians. For a while, people called him the “white knight” of crypto.
But in 2022, everything fell apart. Investigations showed that FTX moved billions of customer funds to its sister trading firm, Alameda Research. When customers tried to withdraw their money, the company collapsed. The hole in its balance sheet reached nearly $8 billion.
In 2024, Sam Bankman-Fried went to court. He received a 25-year prison sentence for fraud. The fall of FTX was one of the fastest and most dramatic in startup history. It also made governments around the world push for stronger crypto rules.
Theranos – The False Promise of Blood Testing
Theranos, led by Elizabeth Holmes, promised to test hundreds of diseases with just a drop of blood. Investors poured in money, and the company reached a $9 billion valuation.
The truth turned out to be shocking. The technology never worked. Instead of admitting failure, Theranos used secrecy and intimidation to hide the truth.
In 2022, Holmes received a prison sentence of more than 11 years. Her partner and company president, Sunny Balwani, got an even longer sentence. Holmes went to prison in 2023. Theranos became a textbook example of how storytelling and charisma can fool even the smartest investors.
WeWork – From $47 Billion to Bankruptcy
WeWork sold coworking office spaces but marketed itself as a tech revolution. At its peak, the company had a private valuation of $47 billion. Founder Adam Neumann created a culture of reckless spending, self-dealing, and poor governance.
When WeWork tried to go public in 2019, its financial weaknesses came to light. The IPO collapsed, Neumann resigned, and the company shrank rapidly.
By November 2023, WeWork filed for bankruptcy. In 2024, a judge approved a restructuring plan that wiped out billions in debt. The company still exists but on a much smaller scale. The WeWork story showed how easy it is to mistake hype for real value.
Wirecard – The Disappearing Billions
Wirecard, a German payment company, looked like a European tech success story. It claimed to have billions of euros in cash across Asia. But in 2020, auditors discovered that €1.9 billion never existed.
The company collapsed overnight. Its CEO, Markus Braun, went on trial in Munich for fraud. In 2024, a German court ordered Braun and two others to pay €140 million in damages. The trial continues, but investors have already lost everything.
Luckin Coffee – Fraud and a Comeback
Luckin Coffee was called the “Starbucks of China.” It grew at a breathtaking pace and opened thousands of stores. In 2020, however, the company admitted that it faked sales worth more than $300 million.
The scandal pushed Luckin into bankruptcy protection in the United States. Many thought it was finished. But after replacing its leadership and fixing its finances, the company made a comeback. By 2024, it had become the largest coffee chain in China and even expanded to New York.
Luckin’s story is rare. Most companies that lie never recover, but this one survived by cleaning house and focusing on real growth.
Nikola – The Electric Truck That Rolled Downhill
Nikola promised futuristic hydrogen trucks and impressed investors with flashy videos. But in 2020, reports revealed that the company faked a demonstration video. Instead of running on hydrogen power, the truck simply rolled downhill.
Founder Trevor Milton faced trial and was found guilty of fraud. In 2023, he received a four-year prison sentence. In 2024, he was ordered to pay $167 million to Nikola. The company still exists but has lost most of its credibility.
Ozy Media – The Fake Media Darling
Ozy Media branded itself as a bold new digital media company. Behind the scenes, executives used fake numbers and shady tactics. In one case, an executive pretended to be a YouTube employee during an investor call.
In 2024, founder Carlos Watson was convicted of fraud and sentenced to nearly ten years in prison. The Ozy scandal showed how far some startups will go to trick investors.
OneCoin – The Fake Cryptocurrency
OneCoin launched in 2014 and claimed to be the next big cryptocurrency. In truth, it never had a real blockchain. It was a giant pyramid scheme that tricked people in more than 170 countries.
Billions of dollars vanished. Co-founder Karl Sebastian Greenwood received a 20-year prison sentence in 2023. In 2024, the company’s head of compliance also received jail time. The most famous figure, Ruja Ignatova—known as the “Cryptoqueen”—is still missing and remains one of the world’s most wanted fugitives.
JUUL – The E-Cigarette Startup That Sparked a Health Crisis
JUUL changed the vaping industry. Sleek designs and flavored pods made it popular among teenagers, which created huge backlash. Parents, schools, and regulators accused the company of targeting young people.
In 2023, JUUL agreed to pay $462 million to settle investigations with several U.S. states. This became the biggest settlement in its history. The company still sells e-cigarettes but faces strict restrictions on how it can advertise.
Byju’s – India’s EdTech Giant in Trouble
Byju’s, an Indian education technology startup, grew fast during the pandemic. At its peak, it was valued at $22 billion. But things soon went wrong.
Auditors resigned, debts piled up, and reports showed missing cash. In 2024, India’s insolvency tribunal started proceedings against Byju’s. Around the same time, one of its biggest investors, Prosus, wrote off its entire stake in the company. What once looked like India’s proudest startup now fights to survive.
What These Scandals Teach Us
The scandals of the past decade show clear patterns:
- Culture problems: Many startups gave too much power to one founder and ignored basic governance.
- Opaque business models: Startups that refused outside checks or avoided audits often hid serious problems.
- Long legal battles: Scandals take years to settle in courts, leaving investors and employees stuck in limbo.
- Rare recoveries: Almost no company survives a fraud scandal. Luckin Coffee stands out as an exception.
How to Spot the Next Scandal
Investors, employees, and customers should stay alert for early warning signs:
- A founder who resists independent audits.
- Financial results that seem too good to be true.
- A culture that discourages questions.
- A company that thrives more on hype than on product results.
When these signs appear, it is better to ask hard questions than to wait for regulators to step in.
Final Thoughts
The last ten years gave us unicorns and decacorns, but also spectacular crashes. From Theranos and FTX to Byju’s and Luckin Coffee, the biggest scandals remind us that unchecked ambition can destroy trust in an instant. As new startups rise, their leaders must remember that growth without honesty is only a countdown to collapse.
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