What we learned from the biggest cryptocurrency scam of all time

The cryptocurrency sector’s reputation as a better alternative to traditional industries has been challenged by fraud. Unfortunately, some of the largest blockchain networks and exchange platforms have fallen victim to serious fraud, sometimes leading to complete shutdowns of their platforms. Some criminals break into blockchain networks and steal funds, while others simply trick investors into making legitimate deposits into fraudulent projects.

Last year, the volume of cryptocurrency-related fraud and hacking reached $1.8 billion, with an average of $2.45 million per incident, according to a report by Certik, a Web3 cybersecurity software company. By 2022, the total will be even higher at $3.7 billion. These numbers are worrisome for cryptocurrency enthusiasts in general and those interested in cryptocurrencies in particular. New cryptocurrency project And investment. In fact, Alan Draper says that when researching new cryptocurrencies to buy, it’s important to always keep in mind that there are many risks involved. Fortunately, there are several precautions investors can consider to reduce their risk of being scammed by cryptocurrency.

The biggest cryptocurrency scam of all time

Here are two of the biggest cryptocurrency scams in industry history and how they came about.

OneCoin (2014~2017)

OneCoin, launched by Dr. Ruja Ignatova and Sebastien Greenwood in 2014, was a fraudulent Ponzi scheme. The company’s structure focused on paying out early investors using money received from new enrollees. OneCoin was touted as the next best altcoin, but it had no actual blockchain or blockchain history and was not supported by any mining activity. The platform was eventually shut down without notice in 2017 after receiving approximately $4 billion from at least 3.5 million victims. While Greenwood was sentenced to 20 years in prison Ignatova has been on the run since 2017 after being charged with wire fraud and money laundering last year.

BitConnect (2016-2018)

The BitConnect cryptocurrency has attracted several investors by promising high returns through its high-yield investment program. This was also a Ponzi scheme, with funds deposited by new users being paid out to early users. The platform, led by founder Satish Kumbhani, sells BitConnect Coin (BCC) to investors, saying it has an unbeatable trading algorithm. BitConnect was later revealed to be a Ponzi scheme and was eventually shut down in January 2018. We refunded the customer in BCC, but its value had fallen by almost 92%. BCC eventually fell from a high of around $525 to less than $1. According to the U.S. Securities and Exchange Commission (SEC), BitConnect successfully defrauded investors of more than 325,000 BTC, worth approximately $2 billion at the time.

How to avoid common cryptocurrency scams

• Do Your Own Research (DYOR): Prospective investors should maintain the following habits: ongoing research To reduce the risk of becoming a victim of cryptocurrency fraud. Simple research – finding information online, reading white papers, and asking questions on social media forums – can give you a lot of the information you need to spot and avoid cryptocurrency scams.
• Use a trustworthy platform: Investors who stick to trustworthy exchange platforms can more easily avoid cryptocurrency scams. Many major cryptocurrency exchanges and marketplaces perform a lot of due diligence before allowing new projects to trade on their platforms. Any coin officially released or sold on a major cryptocurrency platform is most likely not a scam.
• Remain skeptical: Users should be wary of flashy promises, especially those of new cryptocurrency projects. Projects that guarantee profits or promise high returns are likely scams and may end up being shut down with investor money.
• Take investment advice carefully: Investment advice posted online may be manipulated by fraudulent cryptocurrency projects, but is masked as neutral advice to avoid suspicion. Investors should appropriately scrutinize investment advice for accuracy and signs of sponsorship.

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