Top 6 crypto scams. Cryptocurrency market frauds

Over the past few years, the culture of cryptocurrency payment transactions has evolved significantly. More recently, McDonald's in Lugano, Switzerland has introduced the cryptocurrency payment. The largest European exchange WhiteBIT has announced its partnership with Netflix, and plans to introduce the ability to renew their subscriptions with cryptocurrency. Last week, the creators of the well-known bot for Telegram Wallet Bot implemented a P2P crypto exchange right in the app. Users were able to exchange cryptocurrency staying in the messenger.

However, let's take a look at vulnerabilities, human naivety, inattention, and discuss the most notorious deceptions in the world of cryptocurrencies in recent years.

The Federal Trade Commission has said that since the beginning of 2021 alone, more than 46,000 people have reported losing cryptocurrencies amounting to a billion dollars – that's one in four dollars of all money stolen using any of the existing payment systems. And this is only official data, real losses can be many times greater. 

The use of cryptocurrencies has several attractive features for scammers, which may explain to us why the reported losses in 2021 were almost sixty times greater than in 2018. In the world of cryptocurrencies, there are no centralized authorities that monitor suspicious activity throughout the network and can stop fraud before it takes place. Transfers of cryptocurrency funds cannot be canceled: once the money has been transferred, it cannot be returned. And most people are still not familiar with how cryptocurrencies work, so there are still cases of major scams.

In 2022, the amount of stolen cryptocurrency decreased by 65% ​​compared to the previous year. The global bearish trend may be the reason.

“The numbers of new, inexperienced users who are more likely to fall for the scammers’ bait have become much less now, since asset prices are only falling, in contrast to the bull market, when they are attracted by the hype and promises of quick payback,” said Chainalysis, an analytics company.

Fraud proceeds are often associated with large projects. For example, BitConnect received over $3.45 billion from victims in 2018, or Pincoin that stole $660 million. The biggest scam of 2022 so far is the Axie Infinity hack, which resulted in $615 million in losses, just under 20% of the funds stolen by BitConnect.

So, here are the TOP-6 crypto scams in the entire crypto market history.

1. BitConnect – $3.45 billion stolen

The largest scam in history turned out to be the well-known ICO model. Bitconnect has announced itself as an open source cryptocurrency that guarantees investors a 40% return. It was later revealed that this project turned out to be an ordinary Ponzi scheme. 

2. Pincoin and iFan – $660 million stolen

Vietnamese projects that collectively swindled $660 million from their investors using convincing sales and smart marketing. Most of this cryptocurrency is still not found. 

3. Axie Infinity – $615 million stolen

In March 2022, hackers discovered an exploit on the Ronin blockchain, which is an Ethereum-based sidechain that powers Axie Infinity. The exploit was the result of a temporary protocol change initiated by Sky Mavis in December of this year. These changes led to a decrease in the security of the protocol itself.

As a result, after a few months, hackers were able to take advantage of the situation. It is significant that Sky Mavis learned about the result of the theft only after users unsuccessfully tried to withdraw funds from their platform – the necessary liquidity was no longer there. 

4. Wormhole – $320 million stolen

Wormhole tweeted about the breach of their cross-chain protocol, saying the platform is looking into a potential exploit. In a subsequent tweet, the company announced that hackers had stolen 120,000 tokens of wrapped Ethereum (wETH) worth $320 million. Then, most of the wETH tokens were exchanged for Ethereum on the main network. 

5. Bitclub Network – $275 million stolen

The biggest cryptocurrency mining scam. Similar to Bitconnect, this was a Ponzi scheme that used marketing to full effect. The BCN project reported on the possession of unimaginable capacities for Bitcoin mining, from which any user can profit. Unfortunately, all these promises were not true.

6. Quadriga – $250 million stolen

This cryptocurrency exchange founder faked his own death. Quadriga was originally Canada's leading and one of the most trusted cryptocurrency exchanges. But later it turned out that from the very beginning it was controlled by scammers.

The founder, who had previously dealt with major thefts, was the only one with access to the private keys providing access to C$250 million worth of cryptocurrencies. One day, the founder suddenly died, as well as the key to the users' funds. Many still do not believe that he died, and some are calling for the exhumation of his body to obtain evidence.

Stay vigilant in the cryptocurrency market. Initially, any project may seem promising and reliable, but in the end, leave thousands of users without their investments.