What Are the Most Famous Fraud Cases in Crypto?

What are the most famous fraud cases in crypto? The world of cryptocurrencies has seen countless scams that have ruined many investors. Before these fraud cases were exposed, they went through lengthy fraud investigations, revealing various levels of deception and hidden financial manipulations.

In this blog, you’ll find 6 real fraud cases in crypto and the tactics scammers used to take advantage of investors and users in exchange platforms. We’ve also prepared a list of warning signs to help you identify suspicious schemes and protect your crypto assets. 

6 Most Famous Crypto Fraud Cases

The crypto world has been hit by fraud, with massive financial losses along the way. Which cases are the most well-known? Ponzi schemes and exchange hacks have affected thousands of investors, weakening trust in the market.

Here are some of the most famous cases that have left a mark on cryptocurrency history:

1. FTX Platform

FTX was one of the largest cryptocurrency exchange platforms in the world. However, it was revealed that Sam Bankman-Fried, its founder and CEO, had used customer funds to finance high-risk operations through his other company, Alameda Research.

The liquidity crisis became evident when numerous users attempted to withdraw their money, resulting in a financial collapse. Within days, FTX filed for bankruptcy, leaving thousands of investors without access to their funds.

How Much Money Was Lost?

• More than $8 billion disappeared, affecting individual investors and major companies.

Who Was Behind the Fraud?

• The main figure behind the collapse was Sam Bankman-Fried, who directed both FTX and Alameda Research. 
• Other executives from his team were also investigated for their involvement in the crisis.

What Legal Consequences Did the Case Have?

• After a lengthy trial, Sam Bankman-Fried was sentenced to 25 years in prison for fraud and other financial crimes. 
• Additionally, he faces multiple lawsuits from investors seeking to recover their lost funds.

2. Bitclub Network

Bitclub Network was introduced as a cryptocurrency mining platform, promising investors higher returns. However, it was a Ponzi scheme, where new participants’ money was used to pay earlier investors, with no real mining operations in place.

For years, the project’s creators attracted thousands of people with the promise of high profits and a reliable investment system. In 2019, U.S. authorities uncovered the fraud, leading to multiple arrests:

How Much Money Was Lost?

• The scheme scammed investors out of $722 million worldwide.

Who Was Behind the Fraud?

• The fraud was led by Matthew Brent Goettsche, identified as the mastermind behind the scheme. Alongside him, Jobadiah Sinclair Weeks and Joseph Frank Abel played vital roles in attracting investors.
• Another key figure was Silviu Catalin Balaci, a Romanian programmer who helped run the platform. 
• Russ Albert Medlin was also linked to the case—he was arrested in Indonesia and later connected to the Bitclub Network fraud.

What Legal Consequences Did the Case Have?

• Following an extensive investigation, the group involved was arrested and sentenced for fraud. 
• Some face up to 20 years in prison, while authorities continue working to recover lost funds.

3. Mt. Gox

Mt. Gox was one of the first and largest Bitcoin exchange platforms. At its peak, it handled more than 70% of all BTC transactions worldwide.

In 2014, it suffered a massive hack, leading to the loss of 850,000 bitcoins. The company claimed that most of these funds were stolen due to a system vulnerability. However, over time, irregularities in fund management were discovered.

How Much Money Was Lost?

• Around 850,000 bitcoins were stolen, valued at $450 million at the time—worth much more today.

Who Was Behind the Fraud?

• CEO Mark Karpelès was blamed for mismanaging the platform. 
• The hackers were never identified, but there were suspicions that the attack may have been an inside job or enabled by security flaws.

What Legal Consequences Did the Case Have?

• Mt. Gox filed for bankruptcy after the hack.
• Efforts have been progressing for years to recover funds and compensate affected users.
• Some bitcoins have been retrieved, but most victims are still waiting for a resolution.

4. OneCoin

OneCoin was introduced as a revolutionary cryptocurrency with the potential to surpass Bitcoin. Its creator, Ruja Ignatova, known as the “Cryptoqueen”, promoted it at large-scale events, attracting thousands of investors with promises of huge returns.

In reality, OneCoin was a Ponzi scheme, with no real blockchain to support transactions. The business was based on recruiting new investors, whose funds were used to pay earlier participants.

How Much Money Was Lost?

• The scam exceeded $4 billion, impacting investors globally.

Who Was Behind the Fraud?

• Ruja Ignatova led the scheme but vanished in 2017 when authorities began investigating.
• Her brother, Konstantin Ignatov, took over operations after her disappearance and was arrested in 2019 in the U.S. He pleaded guilty to fraud and money laundering and has been cooperating with authorities.

What is the current status of the case?

• Ruja Ignatova continues to be a fugitive and is on the FBI’s 10 Most Wanted list.
• Some reports indicate she may have altered her appearance through plastic surgery to avoid recognition.

5. Bitcoin Gold

Bitcoin Gold was created as an alternative to Bitcoin, promising to make mining more decentralized. However, in 2018, it suffered a 51% attack, allowing hackers to manipulate transactions and double-spend coins.

This type of attack happens when a group gains control over most of the network’s computing power, giving them the ability to manipulate transaction history and send out fraudulent payments.

How Much Money Was Lost?

• Hackers stole about $18 million through a 51% attack.

Who Was Behind the Fraud?

• Hackers with access to massive computing power carried out the 51% attack, manipulating transactions and stealing funds.
• Some analysts suspect they rented computing power through cloud mining services to temporarily control the network.

What Legal Consequences Did the Case Have?

• Bitcoin Gold introduced security updates, but its reputation was seriously damaged.
• Many exchanges removed the cryptocurrency, reducing its adoption and trust in the market.

Have questions about dealing with scams? Contact us for support.

Contact us now.

6. My Big Coin

My Big Coin was introduced as an innovative cryptocurrency backed by gold, attracting numerous investors who believed in its stability. Its creator, Randall Crater, promoted the project by saying that the digital currency was supported by real assets and could be used for purchases and secure transactions.

However, the entire operation was a scam. There was no gold reserve or functioning platform. Investors simply transferred money, which Crater and his team used for personal expenses, including luxury cars, jewelry, and expensive collectibles.

How Much Money Was Lost?

• The fraud amounted to $6 million, deceiving investors who believed it was backed by gold.

Who Was Behind the Fraud?

• Randall Crater promoted the cryptocurrency as being backed by gold, when in reality, it was a scam. Using manipulative tactics and social engineering techniques, he convinced victims that they were investing in a legitimate digital asset.
• Several promoters were also involved, assuring investors their funds were safe—some later claimed they were unaware of the fraud.

What Legal Consequences Did the Case Have?

• Randall Crater was sentenced to 8 years in prison for fraud and money laundering 
• He was ordered to repay millions to the victims.

What Are the Most Common Fraud Methods Used?

The cryptocurrency world has been the target of numerous schemes, leaving thousands of people without their investments. Many of them follow similar patterns in how they operate. 

Below, we break down the most common ways to commit fraud in the crypto industry:

1. ICO Fraud Scams

Initial Coin Offerings (ICOs) have been a way to fund crypto projects, but they have also been used to carry out scams. In many cases, developers present an exciting project, raise money from investors, and then disappear without delivering anything.

Some fake projects have promised major innovations, only to leave investors with nothing after investing in an ICO.

2. Phishing

Phishing is a common fraud method in the crypto world. Scammers create fake websites that mimic legitimate platforms or send fraudulent emails to trick users. When victims share their credentials, they lose access to their funds. Some ways this scam occurs include:

• Cloned websites that replicate exchange platforms or digital wallets.
• Fake emails that pretend to come from legitimate companies and request login details.
• Messages on social media or chats containing malicious links that steal information.
• Ads on search engines that redirect users to fraudulent pages designed to steal credentials.

3. Pump and Dump

Pump and dump is a fraudulent tactic where a group buys large amounts of a low-value cryptocurrency to artificially inflate its price. As new investors join, attracted by the sudden rise, the organizers sell their assets at a high price, leaving others with losses.

This scheme has affected many lesser-known cryptocurrencies. Before investing, it is better to analyze market movements and avoid assets that experience sudden price peaks without a clear reason.

4. Fake Support

Scammers pose as crypto platform support agents to deceive users and steal sensitive information. They contact victims through hacked emails, chats, or calls, requesting personal data or login credentials. Some warning signs include:

• Asking for passwords or recovery phrases.
• Requesting transfers under the pretense of “verification.”
• Suspicious links in support messages.

How to Avoid Cryptocurrency Scams?

Learn how to avoid crypto scams, protect your money, and make safer investment decisions. Many people have lost their savings by trusting questionable projects. To stay safe, follow these tips:

• Research before investing: Check who is behind the project, read the white paper, and look for community feedback. 
• Be cautious of guaranteed profits: In crypto, no returns are ever assured. If something sounds too good to be true, it probably is.
• Verify platforms and security: Use only reputable exchanges with a strong track record. Enable two-factor authentication (2FA) to prevent unauthorized access.
• Protect your private keys: No legitimate entity will ask for them. Store them securely and offline.
• Avoid suspicious links and phishing attempts: Do not click on unknown emails, messages, or ads that could lead to fake pages.
• Use trusted wallets: Avoid high-risk wallets that lack security measures or transparency. Choose for reputable wallets with strong encryption and proven user protections.

Turn Past Scams into Future Security with CDN

According to Investopedia, in 2024, investors worldwide suffered losses exceeding $10 billion due to various crypto scams and security breaches. Given these risks, managing a company or investing personally makes using preventive measures a wise decision.

At Cryptoscam Defense Network, we’re a community dedicated to protecting and supporting each other. If you ever fall victim to a scam, you won’t have to face it alone. Crypto scams keep changing, but together, we can make the industry safer. Join us and be part of a network that has your back!

We Want to Hear From You!

Fraud recovery is hard, but you don’t have to do it alone. Our community is here to help you share, learn, and protect yourself from future frauds.

Why Join Us?

• Community support: Share your experiences with people who understand.
• Useful resources: Learn from our tools and guides to prevent fraud.
• Safe space: A welcoming place to share your story and receive support.

Find the help you need. Join our Facebook group or contact us directly.

Be a part of the change. Your story matters.