The Man Who Forgot $240M: A Bitcoin Tragedy for the Ages
This is perhaps the most iconic crypto loss story of all time. In 2011, Stefan Thomas received 7,002 BTC for making a video. Today, that stash is worth $240 million. But he forgot the password. An entire fortune locked away forever.
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By all accounts, Stefan Thomas should be one of the richest people in crypto history. Instead, he owns a fortune he can’t touch.
Not because of fraud. Not because of theft. But simply because of one forgotten wallet password.
In 2011, Stefan Thomas was just another skilled developer curious about a strange, experimental currency that was gaining traction among underground tech enthusiasts. It was called Bitcoin. Open money. No banks. No borders.
Thomas, originally from Germany, was living in San Francisco at the time and became interested in the project. He agreed to create an animated video explaining how Bitcoin works. As payment, he received 7,002 BTC, which was only a few thousand dollars back then. It was a modest sum, more like a digital tip from a small community of early adopters.
Like many others at the time, he didn’t give it much thought.
Stefan Thomas stored the private keys to his newly earned coins in a secure digital wallet—an IronKey USB drive known for its military-grade encryption. As a backup, he wrote the seed phrase on a piece of paper.
That piece of paper is now lost.
Related: Lost Crypto: Are There Ways to Recover Your Assets?
The Iron Vault
IronKey was designed to be completely secure—or more precisely, impossible to crack. The device allows exactly ten password attempts. After the tenth incorrect try, it locks itself permanently, making access to its contents impossible.
As the price of Bitcoin steadily rose and then soared, Thomas remembered his hidden stash.
But he couldn’t remember the password.
He tried once. Then again. And again.
After eight attempts, he had run out of ideas—and nearly out of chances.
Only two tries remained between him and $240 million.
I would just lay in bed and think about it. Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again,
Stefan Thomas told The New York Times in 2021.
Public Shock
The Stefan Thomas story first went viral in early 2021.
But the buzz never fully died down.
In 2025, an old Reddit thread resurfaced and pushed the tragedy back into the spotlight.
Tech forums lit up.
Reddit exploded.
Twitter was once again filled with heated discussions.
This would keep me up at night forever,
one commenter wrote.
I lost 5,000 Doge and still think about it daily.
He’s not broke. He just can’t touch what he owns.
This tragedy was about more than just cryptocurrency.
This story wasn’t about the money; it was about the haunting fragility of our digital life.
Related: How Discovering Crypto Turned Into a Nightmare for One Investor
A Philosopher’s Nightmare
By a twist of fate, Stefan Thomas became a symbol.
However, not of wealth, but of digital risk.
In an era when crypto promised financial freedom and sovereignty, his story revealed the darker side of that vision. When you are your own bank, you also become the only point of failure.
The whole idea of being your own bank… Do you make your own shoes?
quipped Alex Stamos, former head of security at Facebook.
In this case, Bitcoin’s architecture ended up working against its owner.
The system did exactly what it was meant to do: it secured the funds, even from him.
The Hacker Circle
As Thomas's story gained media traction, people began offering to help.
Alex Stamos contacted him on Twitter, proposing to hack the IronKey in exchange for 10% of the funds.
Others followed, including Unciphered, a company that specializes in hardware hacking. They claimed to have successfully accessed IronKey devices before and reached out to Thomas with an offer.
But he declined to work with them.
Instead, Stefan Thomas turned to two other teams:
Naxo, a cybersecurity firm, and independent researcher Chris Tarnovsky, who is well known in hardware security circles.
Whether they made any progress is still unknown.
Unciphered remained skeptical of the competition, insisting that their chances were better.
But according to sources, Thomas was in no rush.
No updates.
No collaboration.
And… no clear strategy.
The coins stayed locked.
Related: British Engineer’s $750M Bitcoin Hunt—Will Buying a Landfill Pay Off?
The Value Paradox
Fate can be brutally ironic.
The only reason those bitcoins are now worth $240 million is because Thomas was never able to sell them.
Had he remembered the password earlier, he probably would have withdrawn the funds when Bitcoin was trading at $10,000, $50,000, or even less.
He became a holder by force, and that is what allowed his fortune to grow many times over.
But now, it’s wealth he cannot reach. A mirage.
As one Reddit user put it:
“He became rich because he forgot. And now he stays poor for the same reason.”
The Inheritance Dilemma
The case of Stefan Thomas raised a larger question:
What happens when digital wealth becomes part of an inheritance?
In the physical world, assets can be passed down—real estate, gold, and stocks can be recovered, disputed, or legally transferred.
But with cryptocurrency, there is no second chance.
Lose the private key, and that’s it. The wealth is gone. Not metaphorically. Literally.
If grandpa buried gold and no one found it, maybe one day it’ll be dug up. With Bitcoin, if the key’s gone—it’s over. It’s ash in the wind,
one user commented.
Related: Crypto Heist 101: How Hackers Steal Millions in Crypto
A Missed Opportunity for Ethereum?
During Reddit discussions in 2025, one user shared a surprising detail from Stefan Thomas’s past.
Back when Thomas was the CTO of Ripple, he reportedly hosted a young programmer named Vitalik Buterin who would later go on to create Ethereum.
At the time, Buterin was looking for work and was literally sleeping on Thomas’s couch.
According to some accounts, Ripple’s unwillingness to pursue smart contract development played a role in Buterin’s decision to go his own way.
If true, it means Thomas stood at the edge of crypto history not once, but twice—and watched it slip through his fingers both times.
Waiting for the Quantum Era?
Some still hold out hope.
Maybe one day a quantum computer will become powerful enough to break into the IronKey.
Or a zero-day exploit might be discovered.
Perhaps a neural network could recover the forgotten wallet password from the deepest layers of Thomas’s memory.
No one knows for sure what the future will bring.
Until then, the IronKey remains sealed—a motionless vault, untouched and holding one of the largest personal fortunes in the history of cryptocurrency.
In the End
The crypto loss story of Stefan Thomas isn’t just about Bitcoin.
It’s about the price of knowledge.
About memory. About fragility.
About what happens when the freedom to hold your own keys becomes the burden of never losing them.
$240 million.
Two password attempts left.
Zero margin for error.
And a lifetime to wonder
what might have happened, if only…
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