Crypto analyst Alex Krüger claims that most tokens failed by design, arguing that outdated regulations force projects to launch assets without enforceable rights.
His comments coincide with a significant increase in token failures in the crypto market. Since 2021, more than 13.4 million tokens have 'died'.
Why do so many altcoins fail in the current market?
According to a survey by CoinGecko, 53.2% of all cryptocurrencies listed on GeckoTerminal had already failed by the end of 2025. 11.6 million tokens collapsed in 2025, representing 86.3% of all failures recorded since 2021, indicating unprecedented acceleration.
The number of listed crypto projects rose from around 428 thousand in 2021 to 20.2 million by 2025. This growth was accompanied by an increase in failures: only 2,584 coins died in 2021, a number that jumped to 213,075 in 2022, 245,049 in 2023, and 1.38 million in 2024. However, the collapse of 2025 surpassed all previous years.
Certain segments showed even higher failure rates. Music and video tokens had rates close to 75%. Analyst Krüger argues that outdated token structures and norms fueled the crisis.
“… Most tokens already created are useless by design due to outdated regulations,” he wrote.
In detailed analysis, Krüger pointed out that the use of the Howey Test by the SEC and reactive regulatory actions pressured crypto projects. The Howey Test is adopted by American authorities to decide whether a transaction should be considered an 'investment contract' and, therefore, a security under U.S. law.
A transaction is classified as a security if it involves:
an investment of money,
in a common enterprise,
with an expectation of profit,
based on the efforts of others.
If the four criteria are met, U.S. securities laws apply. To avoid being classified as a security, teams have systematically begun to strip all rights from tokens. According to Krüger, this process resulted in an asset class grounded in speculation, not ownership.
This choice deeply impacted the sector. Without contractual rights, token investors have no legal options. Meanwhile, founders do not assume fiduciary obligations to those who provide funds.
In practice, this created a vacuum of responsibility. Teams can control large treasuries or abandon projects without facing legal or financial repercussions.
“… In any other market, a project that offers zero rights and total opacity of the treasury would not raise even a cent. In the crypto universe, this was the only way to comply. The result is a decade of tokens designed for soft rug,” he adds.
Frustrated with utility tokens backed by venture capital, retail traders opted for memecoins, which transparently offer a lack of utility. Krüger highlighted that this movement amplified speculation and inflated intense market dynamics.
“… And this only exacerbated the problem: memecoins are even more speculative and less transparent, accelerating the transition to predatory PVP trading and zero-sum betting,” he noted.
Bingo. Largely why fungible tokens are uninteresting to me right now and I see nearly 100% of them as poor risk:reward.
There will be a reckoning and bleed to zero of nearly all of them. Eventually clear regulations will lead to tokens with strong fundamentals and/or equity.… https://t.co/INj6yH77j7
— DGMD.6529 (@DGMD22) February 8, 2026
Krüger argues that the solution lies in a new generation of tokens under stricter regulatory rules.
Article 13.4 million altcoins ended with SEC regulation was first seen in BeInCrypto Brazil.