Biggest Crypto Scams of All Time

Jan 23, 2024 | Crypto Scam Defense | 0 comments

Each year, the digital currency market -known as cryptocurrency– continues to change the global economic model. According to Statista, the cryptocurrency market is on a remarkable growth trajectory, expected to generate US$51.5 billion in revenue in 2024 and increase to a total revenue of $71.7 billion by 2028

However, this growing popularity has its disadvantages. The appeal of cryptocurrencies has not only created profitable opportunities but also opened doors for intelligent scams. The Federal Trade Commission reports that cryptocurrency scammers have stolen more than $1 billion since 2021, highlighting the urgent need for awareness and caution.

If you’re planning to invest or are a current crypto investor, understanding the tactics used by scammers is critical to safeguarding your investments. In this post, we’ll talk about some of the biggest crypto scams in the past few years and give you essential tips to help you detect and prevent falling victim to such scams.

Cryptocurrencies

Biggest Crypto Scams of All Time

Cryptocurrencies arrived on the market to revolutionize investment and savings methods, but their unregulated nature and anonymity made them attractive for scammers to invent strategies and tools for defrauding users. 

Here is a list of some of the biggest scams in the past few years:

1-Mt. Gox (2011-2014)

Once the world’s largest Bitcoin exchange, handling over 70% of Bitcoin transactions, Mt. Gox’s downfall began in February 2014 when it suspended withdrawals, citing technical difficulties. 

It was later revealed that the exchange had lost approximately 850,000 bitcoins, valued at over $450 million, due to hacking and mismanagement. The exchange filed for bankruptcy, and its CEO, Mark Karpeles, faced legal proceedings. 

By June 2023, legal documents named two Russian hackers accused of laundering these bitcoins, and plans for partial fund restitution to victims were postponed to late October 2023.

2-OneCoin (2014-2017)

OneCoin, founded by Dr. Ruja Ignatova and Daniel Dabek, was a classic Ponzi scheme disguised as a revolutionary cryptocurrency. Despite lacking a real blockchain, it was heavily promoted as a Bitcoin competitor. 

The scheme involved selling educational packages for mining OneCoin, with prices ranging from $100 to $100,000. Despite clear warnings from the crypto community, OneCoin has amassed billions in global investments. 

The disappearance of Dr. Ignatova in 2017 led to the scheme’s unraveling, culminating in a loss of about $25 billion.

3-Bitconnect (2016-2018)

As a cryptocurrency lending and exchange platform, Bitconnect promised high returns through its Bitconnect Coin (BCC). Investors were convinced to invest in Bitcoin in exchange for BCC and promised daily interest. 

This operation, reinforced by an aggressive referral system, saw the value of BCC skyrocket to over $400 per coin. However, the reality of it being a Ponzi scheme came to light in 2018, leading to a sudden shutdown and catastrophic losses for investors.

4-Thodex (2017)

Thodex, renowned as a major Turkish digital asset trading platform, experienced an abrupt stop in its operations in 2021. This sudden shutdown was followed by the founder’s escape from Turkey, taking with him cryptocurrencies valued at $2 billion, a devastating blow to over 100,000 investors

This turn of events led to the founder’s arrest and extradition, facing allegations of fraud and money laundering. The Anatolia Supreme Penal Court handed down a severe sentence to the founder and his two brothers—11,196 years, 10 months, and 15 days in prison, along with a goodly fine of $5 million.

5-Centra Tech (2017)

Sohrab Sharma, Robert Farkas, and Trapani founded Centra Tech in 2017, offering cryptocurrency financial products including a “Centra Card.” They misinformed customers and investors about partnerships and technological capabilities. 

They lied to customers, saying that this card could be used like a regular debit card at businesses accepting Visa or Mastercard. Furthermore, they enticed investors with the opportunity to purchase what they termed “Centra Tokens” essentially unregistered securities.

The FBI confiscated 100,000 units of Ether and sold them in 2020 for $33.4 million to compensate victims. Robert Farkas received a prison sentence, while Sharma and Trapani await final sentencing.

6-PlusToken (2018-2019)

PlusToken, targeting Asian investors, promised high returns for crypto deposits. This scheme attracted millions of users and billions in cryptocurrencies, becoming a massive pyramid scheme with 3,293 layers

The abrupt halt of withdrawals in 2019 and the arrest of its operators marked the end of this scam. The seizure of assets worth $4.2 billion by Chinese authorities was a significant blow to this fraudulent operation.

7-FTX (2019)

FTX’s bankruptcy was a major event in the cryptocurrency world. Founded by Sam Bankman-Fried, FTX was once valued at $32 billion. Its downfall, marked by accusations of misappropriating billions in customer deposits and misleading investors, had a severe impact on the market. 

The subsequent trial of Bankman-Fried and the drastic drop in Bitcoin prices underscored the fragility and volatility of the cryptocurrency market.

8-Quadriga (2019)

Canada’s leading crypto exchange, Quadriga, was later discovered to be run fraudulently. Founder Gerald Cotten, who had exclusive access to the private keys to $250 million in cryptocurrencies, reportedly died under suspicious circumstances. 

Doubts about whether Cotten faked his death are significant, and his widow managed to return about $9 million to investors to partially cover the losses.

Each of these scams had a profound impact on investors and the cryptocurrency market, offering crucial lessons about the need for vigilance and thorough research in the digital finance world.

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How to Detect Crypto Scams

Crypto scams, with their varied forms and convincing psychological tricks, present a significant risk in the digital currency scenario. To safeguard against these fraudulent schemes, it is essential for investors and users of crypto exchanges to be vigilant and informed, so be on the lookout for these suspicious signs:

  • Promises of Guaranteed Returns: The crypto market is inherently volatile, and risk is a constant companion to all investments. If an opportunity promises high or consistent returns with minimal or no risk, it is likely a scam. Genuine investments never guarantee returns, especially in the unpredictable crypto market.
  • Lack of Documentation and Transparency: Legitimate projects will have clear, transparent information about their investment strategies, teams, and the technology they use. If a project is evasive about providing detailed documentation or information about its founders and team, it’s a sign of potential fraud.
  • Pressure Tactics: Scammers often create a sense of urgency, pressuring investors to make quick decisions by claiming that the opportunity is time-sensitive. Always take the time to conduct proper due diligence before making any investment decisions.
  • Unsolicited Offers: Be wary of cold calls, emails, or social media messages offering investment opportunities. Legitimate offers are usually not made through these channels.
  • Fake Websites and Information: Scammers typically create fake websites and social media profiles to impersonate legitimate projects. Search for any inconsistencies, incorrect spellings, and information without verification. Fake news articles, testimonials, or endorsements are common tactics to feign legitimacy.

Protect yourself from online fraud with our expert guide to detecting fake websites. Read our blog post: How to Detect Fake Websites for essential tips and insights.

  • Personal Information Requests: Never share private keys, passwords, or personal identification details. Legitimate projects will not require such sensitive information.

For more detailed insights and tips on avoiding common cryptocurrency scams, read our article: 10 Most Common Cryptocurrency Scams and How to Avoid Them. Stay safe and informed in the digital currency world.

Conclusion

These big-scale cryptocurrency scams serve as a clear reminder that as the digital finance market expands, so do the tactics of fraudsters. Staying informed of the latest preventive measures is crucial to safeguarding ourselves against such scams

At Cryptoscam Defense Network, we provide a wide range of resources and support, part of a bigger ecosystem dedicated to fighting these scenarios. We encourage you to remain vigilant, report any questionable activities, and share your insights on cryptocurrency with our community. 

By joining forces with us, you contribute to creating a more secure digital financial environment, not only by advising scams but also by empowering each community member to proactively speak of emerging dangers.

We Want to Hear From You!

The fight against cryptocurrency scams is a community effort, and your insights are invaluable. Have you encountered a scam, or do you have questions about navigating the complex world of digital currency? Maybe you have suggestions or want to share your story to help others. Whatever your experience, we’re here to listen and support you.

Reach out to us at hello@cryptoscamdefensenetwork.com. Share your stories, ask questions, or make comments. Your voice is crucial in building a resilient and informed community. Together, we can improve our defenses and promote a safer digital space for all.

Be a part of the change. Your story matters.

Photos via Pexels.