Blockchain and specifically the Cryptocurrency market is notoriously famous for a number of reasons – The avert stance of Governments across the world, the inability to buy anything from them, and above all for its links with the Dark Web.
To add on to the aversion that the majority of the world already has with cryptocurrency buying and selling, the frequency of scams involving the great sum of money has become responsible for keeping the investors away from investing into the volatile but seemingly addictive investment mode.
Here are the 10 Cryptocurrency scams that have played its part in keeping investors away from the unregulated digital currency for good.
1- iFan and Pincoin
A Vietnam based cryptocurrency brand Modern Tech made an ICO launch for the Pincoin Token, which raised approximately $660 Million from over 32,000 people.
The brand first launched Pincoin ICO, which promised returns to the investors and soon after they launched their second token iFan as well.
The Picoin investors received cash on their investment for sometime after which they started receiving rewards in way of iFan tokens. And soon after, the team disappeared.
The exit scam is deemed one of the largest scams in the crypto fraud history, where seven Vietnamese nationals left the nation after scamming investors out of their Ho Chi Minh Headquarters.
The company left its headquarter in March suddenly without informing the investors, leaving behind a website with zero information about the founders and the new corporate address.
Between both Pincoin and iFan, Modern Tech duped over 32,000 investors robbing them off of VND 15 Trillion.
The concept behind OneCoin is selling of education materials that are designed to help the traders. The traders who sign up get to purchase educational packages which cost between 100 and 118,000 Euros.
The first time when the possibility of OneCoin being a Ponzi Scheme came into the limelight was when even after OneCoin recruiters keeping a stand on how the platform does not sell cryptocurrencies, the recruitment meeting said otherwise.
Recruiters normally spent their time in the meetings talking of cryptocurrency investment and not educational materials.
The next sign was when OneCoin CEO, Ruja Ignatova faced charges in India for passing misleading information about the company’s licensing by Vietnamese Government, which when asked said that the “proof” OneCoin presented was forged and contravened the MPI regulations.
To dwell into the investigation further, Indian police arrested 19 OneCoin recruiters who were arrested with more than $3.6 Million in over 9 bank accounts, while $11.1 Million were transferred before they could be seized.
The further investigation into the funds that OneCoin had received suggested that a great amount of money was transferred to Bulgaria of which $19 Million were found to be invested in properties that belonged to questionable companies and individuals.
As a part of one of the world’s biggest celebrity-backed cryptocurrency scandals – Centra Tech, the FBI was able to seize over 91,000 Ether amounting to $90 Million from the Centra Tech Team.
The company that made an earning of over $32 Million by selling the tokens to unsuspecting users, has displayed an ‘Under Maintenance’ banner on their website for quite some time now. And at the back of an endorsement by boxer Floyd Mayweather and DJ Khaled, the company even said that they are backed by Mastercard and that the Centra Card (a crypto-based card) could be used be used to purchase the good in Bitcoin in stores that accepted MasterCard.
A civil complaint made against Centra Tech stated that when SEC notified Sam Sharma, one of the founders of the company, the bank accounts got depleted and a number of employees were terminated within a month, while another co-founder, Farkas tried to flee the United States.
4- My Big Coin
This one scam is the textbook case of classic scams but dubious nonetheless. The website mybigcoin.com sold fake bitcoins robbing the investors off of $6 Million.
The website was later sued by US Commodity Futures Trading Commission in January.
On their website, Mybigcoin.com, the owners stated that coins were traded on numerous platforms while the money was getting transferred to personal bank accounts and then was used to purchase luxury items.
The company even went on to say that they were partnered with MasterCard – a statement curated to mislead the users into buying My Big Coins from the website.
MyBTGWallet, the Bitcoin Gold Wallet is the last in our list of the biggest crypto-based scams that the world had witnessed. Through the scam, over $3.3 Million were transferred from the users’ wallet to the address of the website owner.
It was revealed that the MyBTGWallet owners lead the users in a trap be asking them to claim Bitcoin Gold by submitting their private key. Once the information was entered by the users, the website owner got the access to the funds which were in users’ wallets, which were then sent to their own addresses.
6- Parity Wallet Hack
The UK based startup, Parity noted a security breach in the version 1.5 of its wallet software, which resulted in a minimum of 150,000 ethers getting stolen from the user accounts of the wallet.
The bug was lying in the multi-signature wallets compromised a number of companies’ ICO fundraisers. The issues were denoted ‘Critical’ by the company’s Chief Technical Officer, Gavin Wood who announced the world of the hack and said that efforts were being made to save further losses.
It was then found that over 70,000 ethers were cashed out or redeemed in one way or the other.
7- Enigma Project Scam
Enigma, the Blockchain startup found that the company website, administrator account, and the mailing list linked on Slack was compromised as fraudsters defrauded investors of more than 1,500 ethers following a fake token’s pre-sales in August.
All the accounts that were hijacked guaranteed a huge ROI by impersonating the project’s genuine operators, with the aim to convince the consumers to make the donation to the compromised site.
8- NiceHash Breach
After an employee’s computer was hacked, the fraudsters were able to get into the system of NiceHash, the cryptocurrency mining marketplace.
The company confirmed that over 4,700 bitcoins were stolen which valued up to $78 Million.
The DAO was developed to function like the VC fund for decentralized cryptocurrency services. It was built as the smart contract on Ethereum Blockchain which ran crowdfunding campaign which attracted $150 Million valued Ether.
Later, funds were seen leaving DAO and over 3.6 Million plus Ether was drained in a matter of few hours. The hacker apparently took advantage of a lag which was making the DAO smart contract to return the Ether numerous times before it was updating the internal balance.
10- Bitfinex Hack
The company had to lose 119,756 Bitcoins valued at $72 Millions after hackers attacked the world’s biggest Bitcoin exchange.
The attackers took an advantage of the vulnerability of the multi-signature system that was used for signing the Bitcoin withdrawals. The root of vulnerability was linked to the structuring of Bitfinex accounts in connection to BitGo – the Bitcoin Wallet Provider.
Here were the 10 cryptocurrency scams that shook the world and did the deed of pulling investors’ attention away from the disruptive technology – something that the industry is still struggling with.