The Chryse Incident was a massacre of civilians by the EDF that occurred sometime before the Second Martian Revolution. It occurred in order to allow mining companies to gain access to ore deposits at their colony. It was a major factor in the formation of the second Red Faction.
Chryse Planitia lies near to Tharsis and the town presumable was formed in the initial colonization of Mars after the first Martian uprising. However, with Earth's economy on the verge of collapse, mining corporations pressurized the EDF to take more brutal measures to gain access to the ore which they sell. According to Hugo Davies at the start of the 2nd mission of Red Faction Guerrilla, the mining companies discovered a large ore deposit beneath the colony at Chryse and tried to evict the settlers but they resisted their attempts. However, the EDF then sent a unit in to remove the settlers. It is later claimed that Halvar Gunnarsen was captain of said unit. At least 300 people were killed by the EDF's attack and many more were probably wounded or imprisoned. It is implied by Voice of Mars news reels on the loading screen that Carmen Avila was captured during the Chryse Incident and was imprisoned by Colonel Joseph Broga.
The colony was completely abandoned by the survivors and it presumably became a mine. Hugo Davies would later lead the survivors to link up with other people who were victims of EDF attacks, forming the core of the Red Faction that would later overthrow the EDF as the main government of Mars. The Chryse Incident did a lot of damage to the image of the EDF in the eyes of the people of Mars, who began to see them as brutal oppressors. It is unknown how the EDF command reacted to the actions of Captain Halvar Gunnarsen but they presumably weren't negative as he kept his position of Captain and was later assigned the management of the Dust Sector.