The cryptocurrency industry, despite its promise of decentralization and innovation, has been a magnet for scams and fraudulent schemes. With minimal regulation and high stakes, many investors have fallen prey to schemes that resulted in billions of dollars in losses. Below, we explore the 10 biggest crypto scams in history that left the crypto world reeling.
10. Mt. Gox Hack (2014)
Once the largest Bitcoin exchange, handling over 70% of all Bitcoin transactions, Mt. Gox became synonymous with crypto vulnerabilities. In 2014, the exchange declared bankruptcy after hackers stole approximately 850,000 bitcoins, worth about $450 million at the time.
The hack not only shook investor confidence but also highlighted the lack of security in crypto exchanges. While some funds have been recovered, the legal and financial repercussions of this breach continue to this day.
9. BitConnect (2018)
BitConnect, launched in 2016, promised unrealistic daily profits through its crypto investment platform. It operated as a classic Ponzi scheme, enticing investors to exchange Bitcoin for BitConnect Coins (BCC).
By late 2017, BitConnect had a market cap of over $2.5 billion, but the scheme collapsed in early 2018 after regulatory scrutiny. The BCC token’s value plummeted, leading to massive investor losses and marking BitConnect as one of the most infamous crypto scams.
8. OneCoin (2017)
Marketed as a revolutionary cryptocurrency, OneCoin turned out to be a multi-level marketing (MLM) scheme with no actual blockchain technology. Founded by Ruja Ignatova, OneCoin lured investors with promises of educational packages and massive profits.
The scam amassed billions globally before authorities intervened. Ignatova vanished in 2017 and remains one of Europe’s most wanted fugitives. The saga of OneCoin serves as a stark warning about due diligence in crypto investments.
7. QuadrigaCX (2019)
QuadrigaCX, Canada’s largest cryptocurrency exchange, unraveled after the reported death of its founder, Gerald Cotten, in December 2018. Cotten was allegedly the sole person with access to the exchange’s cold wallets, where $190 million in cryptocurrencies were stored.
Further investigations revealed that the wallets were empty months before his death, suggesting fraudulent activity. QuadrigaCX’s collapse left thousands of users without their funds and highlighted the dangers of centralized control in crypto exchanges.
6. DAO Hack (2016)
The Decentralized Autonomous Organization (DAO) was an ambitious Ethereum-based venture capital project. Within weeks of its launch in 2016, it raised over $150 million in Ethereum. However, a flaw in its smart contract allowed an attacker to siphon off 3.6 million ETH, worth around $50 million at the time.
To recover the stolen funds, the Ethereum community implemented a hard fork, creating two blockchains: Ethereum (ETH) and Ethereum Classic (ETC). This hack remains a pivotal moment in blockchain history.
5. PlusToken (2019)
PlusToken, a crypto wallet platform, operated as one of the largest Ponzi schemes in the crypto space. Promising high-yield returns, it targeted millions of investors, particularly in Asia, and amassed an estimated $2 billion in cryptocurrencies.
By mid-2019, withdrawals became impossible, and key operators were arrested. The scheme’s collapse caused significant disruption in the crypto market, especially as the stolen funds were sold off, impacting prices.
4. Ronin Network Hack (2022) $RONIN
In March 2022, the Ronin Network, an Ethereum sidechain for the popular game Axie Infinity, suffered one of the largest crypto heists in history. Hackers exploited vulnerabilities in the network to steal approximately $625 million in Ethereum $ETH and $USDC
The incident underscored the risks associated with blockchain-based gaming and DeFi platforms. Efforts were made to strengthen the network’s security, and partial reimbursements were provided to affected users.
3. Mirror Trading International (2020)
Mirror Trading International (MTI) was a South African-based Ponzi scheme that promised massive returns through automated crypto and forex trading. Using advanced AI-driven strategies as a lure, it attracted over 280,000 investors.
By late 2020, MTI collapsed under regulatory pressure, leaving thousands of investors with significant losses. Its CEO disappeared, and the scam became one of the largest crypto frauds in South Africa’s history.
2. Wormhole Hack (2022)
Wormhole, a cross-chain bridge, suffered a $325 million exploit in February 2022. Hackers minted 120,000 fake Wormhole Ethereum tokens by exploiting a vulnerability in the bridge’s smart contract.
Developers acted quickly, offering a $10 million bounty to the hacker for the return of the funds. While some funds were recovered, the incident highlighted the risks of decentralized finance (DeFi) protocols.
1. Thodex (2021)
Thodex, a Turkish crypto exchange, made headlines in 2021 when its founder, Faruk Fatih Özer, disappeared with an alleged $2 billion in user funds. The exchange abruptly halted all trading and withdrawals, leaving 391,000 users locked out of their accounts.
Turkish authorities launched an international manhunt, but the sudden collapse devastated investors and underscored the importance of regulatory oversight in crypto exchanges.
Conclusion
These scams underscore the volatility and risks inherent in the cryptocurrency industry. While blockchain technology offers immense potential, these incidents highlight the importance of conducting thorough research, practicing caution, and advocating for better security and regulation to protect investors from future scams.
