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Sunaxi 23 Aug 2023 ◦ 4 min read

Keep Your Guard Up: Some of the Most Audacious Crypto Scams

Keep Your Guard Up: Some of the Most Audacious Crypto Scams

Do you know how everyone keeps telling you to be extra careful in the crypto world? Do you remember how annoying it may be? These feelings are totally understandable. However, we would like to show how a little attention to detail never harms anyone. 

Cryptocurrencies have become extremely popular. Their adoption is only increasing over time. The current political situation, inflation, and sanctions only push people further into crypto. On the other hand, politicians worldwide are working super hard to create regulations for an emerging part of the economy. These opposite activities set up a perfect space for astonishing schemes.

Let’s look at some bright examples.

Some of the Most Twisted Schemes in Crypto History

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OneCoin is a Ponzi scheme that was launched in 2014 under the name OneLife. It was founded by Ruja Ignatova, a Bulgarian national who allegedly lived in Dubai.

The company claimed to be developing a cryptocurrency called OneCoin, but it had no blockchain and no Proof-of-Work. It also claimed to be the "first digital currency which was accessible globally and could be used for daily transactions."

In reality, OneCoin had no intrinsic value because it wasn’t backed by anything. There were no real-world applications for this cryptocurrency and it wasn’t used as a form of exchange as promised. The only use cases for OneCoin were to pay fees to users joining the Ponzi scheme or to buy packages from recruitment affiliates.

OneCoin affiliates were encouraged to recruit new affiliates who would buy packages of "tokens" at €149 each. These tokens weren’t backed by anything either, but they were sold as if they were shares in a company that would eventually become profitable once enough people bought them up. The goal was to make money from these newly recruited affiliates without having to sell any products or services yourself.

In 2017 Ruja Ignatova completely disappeared from all the radars. Investigators completely lost any hope to see her ever again. There were even reports of her being killed on another businessman’s yacht. Others believed that she performed plastic surgery on herself to hide her identity. However, at the very beginning of 2023 she seemed to reappear in the UK to save a piece of her properties from being sold. 

Ilya Lichtenstein and Heather Morgan

Another infamous scheme was made by Heather Morgan, an American businesswoman, and her husband, Ilya Lichtenstein, in 2016. The pair used their positions at Bitfinex to defraud investors by creating fake accounts on the platform and using those accounts to deposit money into the real accounts of their friends, family members, and themselves, according to court filings.

Through a network of digital wallets and fake Internet accounts, they were able to hide a Bitcoin sum, which presumably is equivalent to $71 billion dollars. This was an amazing precedent, since Bitcoin is known for its transparency. Anyone who makes transactions is visible and trackable. Thus, to accomplish their plan they had to move tiny sums several times to cover tracks.

Heather Morgan and Ilya Lichtenstein were ordered to pay $1.8 million in fines and restitution, according to a court filing Thursday. Morgan is also facing criminal charges from the U.S. Attorney’s Office for the Southern District of New York.

Crypto Billionaire Arrested

Being a billionaire does not protect you from justice even in the crypto world. You have probably heard about the FTX’s unbelievable downfall. In November 2022 the FTX exchange company declared bankruptcy. Different people suggest various reasons for what happened there. The two most popular versions are: it was a rival war between FTX and Binance or, as others claim, that it was management incompetence that led to the known result. 

Whatever the reason was, a founder of FTX, Sam Bankman-Fried (SBF), was arrested in the Bahamas. As a matter of fact, this was the very first real action taken by the government regarding the FTX situation. 

As more details were revealed, it turned out that at least some of the clients’ funds went to support SBF’s trading company, Alameda. Undoubtedly, this made these funds exposed to major risks. 

Even though it’s still not completely clear what happened within the FTX company, in December SBF was arrested in the Bahamas and later was extradited to the US. Now he is a subject of a court case which is probably going to take quite some time.

Conclusion

As you can see, the crypto world is still full of surprises. We can find a lot of hack reports and threats, and unfortunately, so far, there is no such security system that could guarantee 100% safety. Cases listed above are great examples of the fact that hazards may come not just from mysterious hackers, but also from the owners of companies and quite regular users. This is the exact reason why whenever you decide to go into crypto investments it is crucial to stay cautious. 

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