Cryptocurrencies, whose trail began with Bitcoin in 2009, gave a turnaround in the global economy. As they are based on the principle of decentralized finance (DeFi) and use blockchain technology, they are free from regulations by central banks and similar bodies. In addition, they are public and freely accessible.
This means that you can charge for manufactured products, raw materials or services sold and pay to acquire them, send remittances to relatives, arrange smart contracts and automated processes that are executed within the timeframes stipulated by both parties and even allow the creation of tokens and NFTs that serve as an exchange, investment or platform for various purposes ranging from art to livestock and agriculture.
However, being digital and decentralized products, the same thing that creates its strengths implies its weaknesses: they can be hacked, they allow the creation of fraudulent products or massive scams, since He who possesses knowledge and malice deceives with tempting offers.
The 5 biggest crypto scams in history
Scams and thefts involving cryptocurrencies and other digital assets are counted in the millions. From small thefts to monumental disasters, they have resulted in protagonists to DeFi and blockchain. We summarize the 5 most important ones by transaction volume and affected users.
FTX (2022). $8 billion
The FTX scam is considered one of the biggest in history and A cryptocurrency scandal that will be hard to forgetThe giant exchange was owned by its founder, the young Sam Bankman Fried, who was sentenced to 25 years in prison for poor financial management and fraudulent activities at the head of his business conglomerate.
All this happened between November 2 and 12, 2022, when FTX blocked users' access to the platform and its assets and it was then discovered that the company used its users' resources to finance other risky operations and business done by the company AlamedaResearch Also owned by Bankman-Fried, FTX began paying off its debt to its users on January 3rd.
BitConnect (2016-2018): $2400 billion
El massive fraud Bitconnect's value is estimated at around $2400 billion. It is a Ponzi scheme that will go down in history.This company has duped thousands of users around the world.
It was a platform that It was projected in digital media as an investment. These were the years when Bitcoin was rising and small investors became famous who indulged themselves in incredible luxuries like buying a Lamborghini.
Bitconnect offered very high returns which materialized the unwary who received the money from the first investors until, in 2018, everything collapsed and the regulatory authorities pulled the string and found thousands of investors with huge lossesIn January 2023, 800 users received part of their losses and compensation of approximately $17 million.
Mt. Gox (2014): 950 BTC
Mt. Gox was a famous cryptocurrency exchange that grew in the shadow of the Bitcoin price explosion in its early years of existence. However, on February 28, 2014, the company suffered one of the largest losses of crypto assets in history, as it announced that its systems had been hacked and 950 thousand BTC disappeared from their coffers.
After declaring bankruptcy, They were able to recover 140 thousand BTC and users were liquidated using the Japanese platform BitbankThis fact greatly affected people's confidence in the cryptocurrency market.
OneCoin (2014-2017): $4000 billion
Between 2014 and 2017 it was present in the crypto market the OneCoin blockchain with its native token of the same nameThis digital asset wasn't real, but turned out to be a Ponzi scheme affecting more than 3 million users worldwide. Its founder was the Bulgarian Ruja Ignatova, who disappeared in 2017.
To this day his whereabouts are unknown and since 2022 There is an alert from Interpol and the FBIThis last body offers a reward of 100 thousand dollars to anyone who provides information leading to his arrest.
Thodex (2021): $2000 billion
The Thodex scam is another one that goes on dark side of cryptography. It is a Turkish exchange founded by Faruk Fatih Özer (24 years old) in 2017. The company operated normally until April 2021, when the platform closed with the excuse of technical problems and the promise to resume operations as soon as these were resolved.
But, it was not like that: Nearly 400 users were affected and the 28-year-old entrepreneur, who had dropped out of school to found Thodex, fled to an unknown location. Faruk Fatih Özer is on Interpol's most wanted list. and the Turkish courts prosecuted him in absentia for fraud, giving him a prison sentence of 11.196 years.
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How to avoid cryptocurrency scams?
If you manage and make investments in Cryptocurrencies and financial products on or off the blockchain It's essential that you know how to protect yourself from fraud or identity theft. Here are some tips to avoid falling victim to scams:
- Stay informed and up to date: This is the best way to invest in digital assets. To do this, read market news frequently and learn to identify patterns not only in prices, but also in the how cybercriminals operate.
- Be wary of suspicious messages that promise to make you rich in weeks: Many scammers often send emails, WhatsApp messages, Telegram or social media ads with surprising offers. Ignore any such messages, and don't share your information.
- Protect your personal information: This is vital. Never share your confidential data, such as your user or passwords. A legitimate platform does not ask for this information. Additionally, you can use technologies such as optimizing two-factor authentication (2FA) for an extra layer of security and connect from secure and private networks and avoid public wifi.
- Trade on trusted and proven exchanges: make sure they use data and transaction encryption and that they have KYC verification which are not infallible methods, but they minimize the risk of fraud.
