With the crypto and bitcoin market growing by the day, more frauds are emerging with the increased amount of new currencies being minted. Scam coins are meant to steal money from naive investors by aggressively marketing them with false promises.
There are several frauds in the cryptocurrency industry, and it can be difficult for those new to the digital asset market to spot them. This essay will assist you in identifying and avoiding fraud.
Here are three of the world’s most serious cryptocurrency scams:
OneCoin ($4 billion con)
OneCoin is widely regarded as the largest cryptocurrency fraud of all time. OneCoin was developed in 2014 by Dr. Ruja Ignatova, a Ph.D. in private international law, and her husband, Daniel Dabek, with hundreds of other altcoins.
Ignatova promoted OneCoin as a “bitcoin killer” in sold-out venues such as Webley Arena (Europe’s second-largest stadium!). The OneCoin community began to gain cult-like status.
But here’s the thing: OneCoin wasn’t even a cryptocurrency. It was an elaborate multi-level marketing enterprise.
OneCoin sold financial education packs that allow owners to mine OneCoin. These packets range in price from $100 to $100,000, with different membership levels allowing customers to purchase larger quantities of the token.
Furthermore, because OneCoin was not registered on the blockchain, there was no mining. Instead, OneCoin was built using the SQL programming language, which means that, unlike a secure, decentralized blockchain, the code might be changed without being recorded (which defeats the entire purpose).
Finally, OneCoin could be traded solely on an internal “marketplace.” This marketplace was always under development, limited what dealers could sell, and made exchanging OneCoin for Euros difficult.
OneCoin had 3 million subscribers by 2017. However, law enforcement authorities worldwide were on to the scam. OneCoin organizers were jailed for fraud in certain countries, and the main website was shut down in January 2019.
Ignatova took a journey from Sofia, Bulgaria, to Athens, Greece, in late 2017, with $4 billion in investor funds in her virtual pocket. Since then, she has not been seen.
OneCoin, ironically, is still in operation today.
Thodex ($2 billion in fraud)
Faruk Fatih Zer founded Thodex, a Turkish cryptocurrency exchange, in 2017.
Bitcoin reached an all-time high of $62k per coin in April 2021. That same month, Thodex went offline, alleging a “6-hour maintenance time.” The closure was prolonged for five days until Thodex finally shut down the platform.
Zer departed Turkey immediately and never returned. He stole more than $2 billion from over 100,000 investors. When it became evident that Zer was misusing the funds, almost 60 arrests were made in the following months. His whereabouts, however, remain unclear to this day.
If Zer is ever caught, he faces a 40,000-year jail term for financial fraud under Turkish law.
Save the Kids ($30,000 scammed)
Save the Kids ($KIDS) was a classic pump-and-dump cryptocurrency effort by a group of YouTubers:
FaZe Clan members used to promote the currency, and it pledged to contribute 1% of all transactions to children’s charities.
FaZe Clan has 26.2 million Instagram, YouTube, and Twitter followers. The esports squad became the first to appear on the cover of Sports Illustrated. Its postings receive a lot of attention, so people took note when they started promoting Save the Children.
The cryptocurrency included an anti-whale system that prohibited anybody from selling more than 0.1% of the total supply in a 24-hour period. However, after a few days of promotion by FaZe Clan and other influencers, the anti-whale mechanism changed from a 24-hour limit to a 1-minute limit.
Influencers ditched virtually all of their bags just days after the debut, plummeting the value of $KIDS. The currency fell 68% in less than two weeks.
Faze Kay, who accepted responsibility as one of the masterminds, made around $30,000 by dumping approximately 6 billion $KIDS tokens in the first 24 hours following the debut. During the fallout, he was sacked from FaZe Clan.
Kay claims he was unaware of the extent of the fraud, but before Save the Kids, he was involved in many pump-and-dump schemes. He allegedly willingly refunded roughly $250,000 to those who had lost money.
Read:
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- Indian police involved in $75 million cryptocurrency scam
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