Biggest crypto scams and how to avoid scammer

In 2021 alone, an estimated $14 billion worth of cryptocurrency was lost to crypto scams. Since the inception of time till this moment, as the world evolves, there has been an influx of scams and people need to know how to avoid scammers.

Certain people who are looking to illegally obtain another person’s money through deceptive manners are all over the internet and now that the world is turning to crypto, scammers have found it’s even easier to bring up scam crypto projects and different means to defraud people.

In this article, there will be a deep explanation on what crypto scams are, the biggest crypto scams ever recorded, how to avoid crypto scams on the internet, how to avoid Scams generally and then give you a crypto scam list to run away from. 

What are Crypto Scams?

People have been scamming even before civilization but the nascency of cryptocurrency shows how easy it was to copy legit crypto projects’ open source code and come up with the creation of new cryptocurrencies. 

Anyone could have access to these open source code on the internet and use it to create projects to either make people wealthy or to defraud them.

You should know that 98% of ICOs (Initial Coin Offerings) of the thousands of new cryptocurrencies launched in the 2016-2018 crypto bubble have been found to either be scams or just colossal failures.

More On Crypto scams

As the word denote, a cryptocurrency scam is a type of deceptive act by criminals who legally or illegally obtain access to private information such as security codes or trick an unsuspecting person into sending cryptocurrency or fund into a compromised digital wallet through investment fraud that involves stealing money from people hoping to invest.

From 2020 down to 2021, Losses from crypto-related crime globally rose to 79%. Cryptocurrency theft has become such a huge industry, in 2020 alone, about USD$3.2 billion worth of cryptocurrency was stolen by criminals. Out of this money, about 72% of stolen funds were recorded from DeFi protocols or DeFi related crypto scams.

Types of Crypto Scams

  • Cloud mining crypto scam
  • Exit crypto scam
  • Phishing crypto scam
  • Celebrity endorsement crypto scam
  • Money Doubler crypto scam
How to scammers

Biggest Cryptocurrency Scams 

Here are the 7 top Crypto Scams that have made history…..whenever you hear any name on this crypto scam list or related to any on this list, please take to your heels. Run!!!

1.  Savedroid 

As I’ve mentioned before, not all crypto scams will come straight off as a scam, some of them will start off as real investment until they exit. Savedroid didn’t exactly start off as a scam but it’s founders shut down their office and social media platforms, before mindlessly posing as an exit scam then coming back to say it wasn’t a scam. Nonetheless, the innocent investors in savedroid lost an estimated $50 million to the project’s tokens crash

2. Quadriga 

Quadriga Fintech Solutions was the owner and operator of QuadrigaCX, which was believed to be Canada’s largest cryptocurrency exchange. In 2019 the exchange ceased operations and the company was declared bankrupt with C$215.7 million in liabilities and about C$28 million in assets.

The downfall of crypto asset trading platform QuadrigaCX (Quadriga) resulted from a fraud committed by Quadriga’s co-founder and CEO Gerald Cotten (Cotten). Clients entrusted their assets to Quadriga, which provided false assurances that those assets would be safeguarded.

Quadriga was later found to have been run fraudulently from the start and its founders were experienced at running other scams.

The founder was the only one with access to the private keys holding C$250 million of its users’ crypto when he suspiciously died, except that most don’t believe he died, and some are still calling for his body to be exhumed to have some proof. Others believed he faked his own death.

3. Pincoin and iFan 

Vietnamese cryptocurrency company Modern Tech, run by a team of seven Vietnamese nationals, launched an ICO for its Pincoin token, raising $660 million from approximately 32,000 people before disappearing in March. 

The company first ran the Pincoin ICO, promising constant returns of about 48% per month to investors, and then launched another token, iFan (a social network token for celebrities). 

Pincoin investors first received cash from their investment and then the team began paying out rewards to Pincoin investors in iFan tokens.

Much of this crypto and investors money is still missing till today.

4. Bitclub Network 

This is one of the biggest known crypto-mining scams. As with Onecoin and Bitconnect, this was a Ponzi scheme that successfully used good marketing and salesmen to bring in $722 million. 

From April 2014 to December 2019, the BitClub Network operated as a fraudulent Ponzi scheme that solicited money from ‘dump investors’ (known as the sheep) in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors into the scheme. 

Silviu Catalin Balaci, a Romanian programer assisted Goettsche and Medlin (the mastermind) in creating and operating the BitClub Network and served as a programmer for the BitClub Network.

BCN promised its investors that it had bitcoin mining equipment and would send them guaranteed profits. Unfortunately, the videos it used of mining equipment belonged to another mining farm, and it seems to have just been a Ponzi scheme from start to finish.

Balaci has admitted to conspiring to engage in wire fraud and offering and selling unregistered securities in connection with his role in the BitClub Network.

5. Thodex 

The crypto exit scam pulled by Turkish crypto exchange Thodex has become one of the most notorious crypto scams in history. 

Thodex trading volumes were reportedly in billions of dollars with approximately 700,000 users before it went offline.

About 391,000 active users on the platform have been unable to access their digital assets after the trading platform abruptly halted trading.

Not long after, Thodex CEO Faruk Fatih Özer was said to fly out of the country from Istanbul to Thailand with $2.2 billion worth of digital assets.

6. Bitconnect 

BitConnect is also one of the most brazen and infamous crypto scams of all time. It started as a Bitcoin investment lending platform before abruptly announcing it is shutting down its lending and exchange services.

According to the United States Securities and Exchange Commission who accused BitConnect and its founder, Satish Kumbhani, of a $2 billion fraud that misused bitcoin raised from investors world-wide. 

Bitconnect was an open-source cryptocurrency that was connected with the high-yield investment program, a type of crypto Ponzi scheme.

The platform scammed an estimated $4 billion in a multi-level marketing-led Ponzi scheme.

7. Onecoin 

OneCoin is a Ponzi scheme promoted as a cryptocurrency by Bulgaria-based companies OneCoin Ltd and OneLife Network Ltd, both founded by self-styled cryptoqueen Ruja Ignatova in connection with Sebastian Greenwood and launched in 2014.

The scam attracted millions of investors over a two-to-three year period but In 2017, Ruja disappeared into thin air and has not been found.

OneCoin claimed to be a cryptocurrency, surprisingly it never even had a blockchain behind it. The platform used multi-level marketing (MLM) to induce people in over 175 countries to sell to friends and family. The project was not traded on any cryptocurrency exchanges and it had its own platform.

The Ponzi scheme was said to have run away  with an estimated $25 billion. 

How To Avoid Scammers/Crypto Scams On The Internet

Five Signs That It’s a Scam

How to avoid crypto scam
  1. FOMO (fear of missing out)

Scammers oftentimes pressure you to act immediately or you miss out on something huge. 

Scammers want you to act before you have time to think. If you’re on the phone, they might tell you not to hang up so you can’t check out their story.

They might say your computer is about to be corrupted or you need to send a code to them now. If you experience this, it’s most likely a tell sign.

2. Scammers give you instructions to PAY in a specific way

If you’re trying to buy something online or invest and there’s a single payment system, or they tell you to pay through untraceable means like crypto or gift cards, there’s a possibility it might turn out fake.

3. Pretend to be from a popular organization

Scammers will pretend to call you from your bank or government or from any popular organization and will start asking personal questions. Fact is, there’s a little or no chance your bank will ever contact you via call, and if it happens then it’d be with an official designated number not a random number.

Some of them do change their caller ID. So be careful.

4. There’s either a Problem or Prize involved

Scammers will most of the time come with a PROBLEM or a PRIZE. They might say you’re in trouble with the government. Or you owe money. Or someone in your family had an emergency. Or you won a lottery Or that there’s a virus on your computer.

Some scammers would say there’s a problem with one of your bank accounts and that you need to verify some information.

5. Spoofing links or web address

Always double check the Web Address (or URL) Communications from popular social websites, online payment processors, or IT administrators. Most web address are commonly used to lure in the innocent public. 

The web address for the phishing site may closely resemble the original website. It may even contain the address of the authentic website, but also includes code to reroute the traffic to a false website.

What You Can Do to Avoid a Scam

There are few tips on how to avoid scammers on the internet. Yes you can actually protect yourself from getting scammed.

1.  Immediately block unwanted calls and text messages. Under no circumstances should you give your personal or financial information in response to a request that you didn’t expect or . Legitimate organizations won’t call, email, or text to ask for your personal information, like your Social Security, bank account, BVN, or credit card numbers.

2. Be careful of attention grabbing and deceptive social media ads even if it is endorsed by a celebrity or an influencer. Scammers often use social media to advertise fraudulent cryptocurrency investment opportunities. 

3. Don’t get FOMOed

Resist the pressure to act immediately out of fear of missing out on an offer. Legitimate businesses will give you time to make a decision. Anyone who pressures you to pay or give them your personal information is a scammer. Don’t allow yourself to be rushed by anyone online.

4. Avoid strange links, texts or pop ups

Do not open suspicious texts, pop-up windows or click on strange links or attachments in emails. Ensure you delete them immediately. Research and verify anyone that sends you a link to click.

5. Keep your personal information secure

Choose your passwords carefully. Choose passwords that would be difficult for others to guess and update them regularly. Keep your password or pin numbers in a safe place

6. Report and Talk to someone you Trust.

Before you do anything else or give out anything, ensure you tell someone you Trust. You can also report Scams to the FTC or Fraud agency of your Country. If you were scammed or think you saw a scam, report it to the Federal Trade Commission.

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