Every Major Crypto Scam, Ranked From Least to Most Stolen | HackerNoon

Cryptocurrency has revolutionized the way we think about money, offering new avenues for investment and financial freedom. But with great opportunity may come great risk. The crypto world has also been plagued by scams and hacks that have cost investors billions of dollars. From elaborate Ponzi schemes to sophisticated DeFi exploits, the dark side of digital finance is full of cautionary tales.

Official stats vary, depending on the source. According to Crystal Intelligence, since June 2011 there have been 785 reported incidents, including security breaches, DeFi hacks, and fraud scams. In total, nearly $19 billion has been stolen, with fraud alone accounting for almost $8 billion. On the other hand, according to Chainalysis, at least $40 billion were received by crypto addresses marked as illicit only in 2024. According to De.Fi, over $80.8 billion has been stolen in crypto frauds and hacks since 2011.

Despite advances in security, crypto crime continues to rise, reminding investors of the importance of vigilance and caution. That’s why we’ll dive here into some of the worst crypto scams ever, exploring how they unfolded and the lessons we can learn from them.

Finiko ($1.5 billion)

All scams on this list have the same narrative for their victims: deposit X amount in crypto or fiat and receive 20, 30, 40, or whatever juicy monthly percent in returns —with few or no explanations about how those profits could be possible. Finiko offered up to 30% and received payments in Tether (USDT) and Bitcoin (BTC) from unaware customers. This was a Russian-based investment platform (but, in reality, a Ponzi scheme) established in 2019 by Kirill Doronin, Zygmunt Zygmuntovich, and Edward Sabirov.

The scheme collapsed around July 2021, with users reporting that they could no longer withdraw their funds. That’s an important piece of knowledge: in Ponzi schemes, the leaders actually pay out some percentages for a while, using the money of new users, because there’s no other income source. Such a system is, of course, not sustainable for the long term, and members end up being defrauded. In this case, Finiko took around $1.5 billion in over 800,000 separate deposits.

Doronin was arrested in 2021, and the other founders followed in 2022. In 2023, Finiko declared bankruptcy, and all the founder’s property was sold to partially pay the debt to the victims. It’s unclear what happened to the total amount of lost funds.

Thodex, an infamous Turkish crypto exchange, was going to occupy the next place at the top. It’s been stated that its founder, Faruk Fatih Özer, left the country in 2021 with a hardware wallet containing $2 billion in funds from customers. However, recent reports showed that losses only amounted to around $43 million.

HyperVerse ($1.8 billion)

Also known as HyperFund and HyperNation, this was a cryptocurrency investment scheme that defrauded thousands of investors globally. Founded by Sam Lee, an Australian entrepreneur once dubbed the “crown prince of bitcoin,” and Zijing “Ryan” Xu, a self-proclaimed “bitcoin king” from China, the scheme operated under the HyperTech group, established in 2020.

Promising daily returns of 0.5% to 1% from cryptocurrency mining, HyperVerse attracted investors with the allure of passive income. However, investigations revealed these claims were false, and the scheme relied on a multi-level marketing (MLM) model, where members were incentivized to recruit others to grow their networks —which means, yet another Ponzi scheme. Reports estimate losses between $1.3 and $1.8 billion, with many investors unable to withdraw their funds.

In a bizarre twist, it was revealed in January 2024 that HyperVerse’s CEO, Steven Reece Lewis, never existed. Promotional materials claimed Reece Lewis held degrees from the University of Leeds and the University of Cambridge and had worked at Goldman Sachs and Adobe. However, no records of his existence were found, and the institutions denied any association. The scheme also used celebrity endorsements, including messages from Steve Wozniak and Chuck Norris, likely obtained through paid services. Despite these efforts to appear legitimate, the scheme collapsed in 2022, leaving investors stranded.

Sam Lee faced legal consequences for his involvement. In January 2024, Lee was charged by the U.S. SEC and Department of Justice with conspiracy to commit fraud, while promoter Brenda Chunga pleaded guilty. Lee, who relocated to Dubai in 2021, denied involvement in HyperVerse’s operations but was implicated in its funds management. Ryan Xu’s whereabouts remain unknown. The HyperVerse saga serves as a stark reminder of the dangers of high-yield promises in the cryptocurrency world.

BitConnect ($4.1 billion)

“Hey, hey, hey. Bitconneeeeeeeect!!!” If you’ve been in crypto for a while, this audiovisual meme must sound familiar. It was a very enthusiastic shout by Carlos Matos, a promoter of Bitconnect, during an event in 2017. At least they left us that. Otherwise, they presented themselves as a lending ecosystem with potentially high earnings and its own cryptocurrency, BCC —but, of course, all of it was nothing more than a Ponzi scheme.

Users were encouraged to exchange Bitcoin for Bitconnect Coin (BCC) and lend these coins for interest payments, supposedly generated by a “trading bot.” This bot claimed to earn profits from market volatility, allowing investors to receive daily interest. However, suspicions grew due to its multilevel marketing model and unrealistic promises of up to 1% daily compounded interest, which are common red flags for Ponzi schemes. By late 2017, Bitconnect’s market capitalization exceeded $2 billion, making it one of the most popular cryptocurrencies at the time.

On January 3, 2018, the Texas State Securities Board labeled Bitconnect a Ponzi scheme and issued a cease and desist order. Just two weeks later, on January 17, Bitconnect shut down its lending and exchange platform, causing BCC’s value to plummet by 92% within hours. Different reports estimate the total losses between $2 billion and $4.1 billion for investors globally.

Legal consequences followed swiftly. In 2021, the U.S. Securities and Exchange Commission charged founder Satish Kumbhani and U.S. promoter Glenn Arcaro with fraud. Kumbhani vanished, becoming a fugitive, while Arcaro pleaded guilty and was sentenced to 38 months in prison. In January 2023, a U.S. court ordered Arcaro to pay $17 million in restitution to nearly 800 victims worldwide. Although some affected investors received compensation, many others were left with significant financial losses.

PlusToken ($5.7 billion)

Guess what? This one was also a Ponzi scheme, with an Initial Coin Offering (ICO) included. PlusToken started in April 2018, mainly targeting investors in China and South Korea. It promoted itself as a cryptocurrency wallet offering high monthly returns, allegedly from trading, cloud mining, and referral commissions. The project also introduced its own token, PLUS, convincing millions of people to invest, promising profits between 9% and 20% monthly.

The scheme was highly successful due to aggressive marketing, including face-to-face meetings and physical advertisements, which helped build trust among investors. By mid-2019, complaints emerged about withdrawal issues, marking the beginning of the end for PlusToken.

Estimates suggest that PlusToken scammers stole between $2.9 billion and $5.7 billion in cryptocurrencies, including Bitcoin, Ethereum, and EOS. Besides, analysts believe that selling these stolen funds contributed to significant drops in Bitcoin’s price in 2019, as large liquidations generally drive down market value.

Authorities eventually caught up with the scheme’s operators. In 2020, Chinese authorities apprehended 27 individuals linked to PlusToken. Additionally, about $4.2 billion worth of cryptocurrency was seized, marking one of the largest recoveries in crypto fraud history.

Now, we have to mention this: Africrypt, a fraudulent crypto exchange from South Africa whose founders disappeared with all the funds, was going to be occupying this position or one very close to it at the top. It’s been described that they stole around $3.6 billion in crypto, but other reports suggest that figure may be not accurate at all.

OneCoin (up to $19.4 billion)

A funny thing about this one? Yes, it was (it is?) a global and massive Ponzi scheme as well, but they never bothered to actually create any real token or ICO, not even to save face. OneCoin was a famous cryptocurrency that wasn’t a cryptocurrency at all because it never existed on any crypto network. They didn’t have any qualms to proclaim that they were using this technology, though.

Launched in 2014 by Ruja Ignatova alongside Sebastian Greenwood, OneCoin was marketed as a revolutionary digital currency with a “private blockchain” whose value kept rising. However, no blockchain or actual coins existed—everything was confined to its own platform. Investors were lured with educational packages priced between $100 and $225,000, which included tokens allegedly used to mine OneCoin. The scheme relied heavily on a pyramid-like recruitment model, rewarding members for bringing in new investors.

OneCoin’s impact was massive, with estimated losses ranging from $4.9 billion to a staggering $19.4 billion, depending on different reports. The vast discrepancy is due to the scam’s global reach and the continuous flow of new victims. The operation spanned numerous countries and languages, using aggressive marketing, flashy events, and even physical ads to gain credibility. They cleverly rebranded under names like OneLife, OneAcademy, and OneWorldFoundation to dodge legal consequences and keep the scheme alive. Despite mounting accusations, many investors were kept hopeful due to the company’s promises of high returns and misleading narratives about its legitimacy.

The fallout was dramatic: Ruja Ignatova, known as the “CryptoQueen,” vanished in 2017 and remains at large, wanted by multiple international agencies, including the FBI. Her brother, Konstantin Ignatov, was arrested in 2019 and later pleaded guilty to charges of fraud and money laundering. Sebastian Greenwood was also apprehended and sentenced to 20 years in prison. Despite these arrests, the scam persists under new aliases like Fantastic Global Team and DealShaker, preying on uninformed investors worldwide. This way, the total stolen amount is still being counted.

Don’t fall for it!

You never know when you may be the next victim of a crypto scam. Protecting yourself requires vigilance and smart practices. Here are some essential tips to keep your investments in your own pocket:

• Control Your Private Keys: If you don’t have your private keys, you don’t have full control of your coins. Legitimate and decentralized platforms like Obytealways enable users to have their own private keys. Avoid platforms that don’t offer this or at least some regulatory support (like crypto exchanges), as they have full control over your funds.
• Use Two-Factor Authentication (2FA): Enhance the security of your crypto accounts by enabling 2FA. This adds an extra layer of protection, even if your password is compromised. In Obyte wallets, you can do this by creating a multidevice account from the Global Settings or by setting up a passphrase used to sign all transactions.
• Thoroughly Research Projects: Before investing, research the project’s team, whitepaper, and community feedback. Anyone can create customized tokens on crypto networks, and not all projects are legitimate. In __Obyte’s Asset Registry__it is possible to create customized tokens without coding for less than $1, for instance. So, always do your own research about every individual asset or project.
• Beware of Unrealistic Returns:If an investment promises high returns with little to no risk, it’s likely a Ponzi scheme. Legitimate investments come with risks and more modest returns.
• Avoid Pressure Tactics: Scammers often create urgency, pushing you to invest quickly. Take your time to evaluate the opportunity and don’t be rushed into making decisions.
• Stay Updated and Informed: Follow trusted crypto news sources and communities to stay aware of the latest scams and threats. Knowledge is your best defense.

By following these guidelines, you can significantly reduce your risk of falling victim to crypto scams and Ponzi schemes. Stay safe!

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