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Often, these scammers prey on the vulnerability, and ignorance of their unsuspecting victims. But one thing remains certain, "if it is too good to be true, then it is probably a scam", and as such, can be avoided. Many scammers use different strategies to lure their victims to act. Many of these popular strategies come in the form of:
(Picture Credit: Data from Chainanalyis report of 2021)
(Picture Credit: Data from Chainanalyis report of 2021)
It is important to research any project, verify it, and avoid greed in order to protect yourself. One of the simplest rules for staying safe is this: "Don't trust anyone". Many scams have happened over the past 13 years of crypto evolution. But this article will be exploring the top 5 crypto scams to shock the industry. These top 5 are picked by their magnitude, the amount of money stolen, and how they were reported by top crypto crime analysts.
Onecoin is still one of the biggest scams in cryptocurrency history. Ruja Ignatova for two years ran the biggest cryptocurrency scam: The "One coin". She operated the company with her brother, Konstantin Ignatova, and co-founder Sebastian Greenwood. They promised their victims all the perks that come with using crypto. Instead, the "Onecoin" company sold educational materials on crypto to its users which was a business model they structured as a pyramid scheme. And for two years, she amassed an estimated $4 billion and disappeared in 2017. Her brother and co-founder were arrested and charged with fraud. But, to date the Cryptoqueen as she was fondly called is still missing.
Another popular scam in crypto history is the Africrypt heist. Africrypt was a crypto investment firm operated by brothers in South Africa. It was founded in 2019 by Ameer and Raees Cajee. The brothers promised investors a 10% ROI of their crypto investment. This outrageous amount hooked many investors, and they pulled in resources. However, In April, they announced that the platform had been hacked. The COO Ameer Caje, one of the twins urged their users and investors not to report to the authorities.
According to him, reporting to authorities will slow down fund recovery efforts. But most investors suspected the announcement and involved law firms to investigate the issue. The investigators discovered that seven days before the hack, employees of Africrypt lost access to the back end of the site. According to reports, the brothers shot down the website and disappeared with $3.6 billion worth of crypto. Making the Africrypt scam the second biggest in crypto history.
Chainanlysis called the PlusToken heist the biggest crypto scam of 2019. According to the Chainanalysis 2021 crypto crime Report,
The PlusToken Ponzi scheme was Chinese based. The token was listed on many popular exchanges and was valued at $350 at its peak. PlusToken wallet company promised users 10-30% high returns each time they bought PlusToken coins with BTC or ETH. They claimed that "exchange profits, mining income, and referral benefits" will generate returns for users. At its peak, they varnished with crypto worth $2 billion-plus and moved the funds through other exchanges. Although at least 6 people connected to the scam were arrested, others remain at large.
In 2018 the Bitconnect exchange native token BCC peaked at an all-time high of $472. The exchange, which began operation in 2016, promised users one percent daily interest. Although it started as a lending platform, on January 17, 2018, Bitconnect shut down. It also promised a model where users earned from a trading bot and volatility software. The Bitconnect exit scam according to US Securities and exchange commission (SEC) raised around $2 billion. In August 2021, SEC obtained a judgment against Michael Noble and Joshua Jeppesen for their alleged involvement in the scam.
According to the 2020 Ciphertrace anti-money laundering report, The Wootoken Scam also came in the form of a multi-level marketing (MLM) scheme. Wootoken promised users a 0.25% to 0.5% daily ROI for a $1000 investment and a 0.3% to 0.65% daily ROI for a $5000 investment. However, the WOR tokens value was only tied to the platform alone. Before it was shut down, Ciphertrace records that Wootoken had more than 700,000 active users. The scam which lasted a little over a year acquired more than $1 billion worth of crypto.