In this article we will explore some of the biggest scams that have occurred in recent memory and analyse the ways in which crypto investors can stay clear of such issues.
1. Coincheck Hack
While most established online exchanges have a multitude of security checks in place against hackers, in 2018 a group of anonymous individuals were able to hack into Coinchecks’ mainframe and make their way with a staggering 500 million NEM (equivalent to $530 million USD).
This scam was carried out through the use of a professional looking ICO campaign.
Giza marketed itself as a company claiming to develop a super-secure currency holder that would allow users to store all their virtual assets in one place. Within a month’s time, the project had raised a whopping $2.4 million USD following which things started to go south.
According to many first hand accounts of people affected by this scam, the developers linked with this project stopped responding to emails and even took down the website within the span of a few weeks.
It was later revealed that all of the people who were featured within the company’s whitepaper were simply hired actors. The photos used within the website were pulled from different instagram accounts illegally, thereby giving the impression that Giza was a legitimate project.
3. Mining Max
US-based firm Mining Max was able to raise a whopping $250 Million USD from investors on the basis of a fraudulent ethereum mining operation. The project seemed legitimate for a couple of months and even provided users with decent returns initially.
However, after a couple of months it started becoming clear to everyone that Mining Max did not use a sustainable business model and the company was only in the market to make some quick money. Following a host of complaints from international investors, Korean prosecutors filed charges against a couple of individuals involved with the company.
While a lot of things still remain unclear, it is alleged that out of the $250 million that was raised during the fundraiser period, only $70 million was actually spent on the operation.
Benebit was another ICO scam that fooled a lot of people on the basis of its sleek presentation and professional outlay.
The Benebit ICO platform promised users with a unique cryptocurrency that would help reward them for their ‘loyalty’. Not only did the project seem appealing at first but as per some media outlets, the people behind this venture were able to raise around $3 Million USD.
It was also revealed recently that an estimated sum of $500,000 was spent into marketing the ICO so as to make it look legitimate. Thus it does not come as a surprise that a lot of people were fooled by this project.
BitConnect is one of those names that people actually took seriously back in early 2017. While the exchange presented customers with an array of lending services that resembled Ponzi Schemes, many people continued to back the project and invest in its offerings.
However, after a year or so, it became apparent that the ridiculous interest rates that the company was offering were just not feasible and within a years time, the company had to shut down after they were issued with a host of cease and desist orders.
It is also worth mentioning that prior to the company’s demise, the BitConnect token had been featured amongst the world’s top 20 most successful tokens.
At this time, we are closing the lending platform only. The BCC Exchange will work as usual and the wallet service will remain operational to hold your BCC on the website.@bitconnect @hitbtc @CoinExchangeio @livecoin_net @CoinMarketCap
— BitConnect (@bitconnect) January 18, 2018
6. Seele ICO Impersonation
Even though Seele is a completely legitimate company that procured its funds in a legal manner, earlier this year, it was reported that a number of scammers claiming to be admins for the company contacted various investors and made their way with nearly $2 million worth of Ethereum.
According to some media outlets, the scammers posed as admins on the Seele Telegram channel and got investors to purchase tokens in exchange for ether before the sale had actually begun.
WARNING: Our team have found out scammer @seelealert to pretend to be our official team to carry out the token sale. We have already finished our token sale therefore we won’t ask anyone to obtain the fund anymore. Be aware of scammer asking you the fund for buying seele token.
— Seele (@SeeleTech) April 18, 2018
Confido held its ICO last November and was able to raise more than $350,000 USD.
The company claimed to have developed a “smart contract” based platform that would be able to streamline business operations for startups looking to incorporate blockchain into their existing structural framework.
Confido’s native currency began trading at an impressive sum of $1.20 per token but within a couple of months, it became obvious that the entire operation was a big ploy to steal money.
Soon after it was found that the project was ridden with loopholes, the main people involved with the project disappeared and all of their social media accounts and websites disappeared almost overnight.
This scam resulted in investors losing a total of $3.3 million to miscreants who deceived and stole the private keys of customers making use of this wallet.
As per reports that can be found on the internet, Mybtgwallet.com was created by a person called John Dass who was a respected member of the Bitcoin Gold community. He promoted the project on various social platforms including Reddit, Steem and was able to lure in many susceptible individuals.
Analysis of the website’s code showed that the page stored an individual’s private keys as and when they were submitted. The owners of the project were also found to have changed the platforms GitHub code in an attempt to steal as much money as they could.
Karbon is another one of those projects that looked extremely legitimate when they took off but a couple of months in, it became clear that the creators were only in the market to make a quick buck.
The platform promoted itself as being a decentralized social marketplace and was able to raise more than $200,000 during its ICO period.
As per the whitepaper, the Ethereum-based project said that it would help facilitate communication channels between users, merchants and advertisers so as to create a trade market that was not only professional but also decentralized.
Plexcoin is another name that might ring a bell with some crypto fans. The project launched its ICO last year and was able to acquire an impressive sum of $15 million.
However, shortly after Plexcoin was scheduled to go live with its platform, the company’s assets were frozen and founder Dominic Lacroix was charged after being accused of defrauding investors by making false claims and promises than could not be delivered upon.