The growth of the cryptocurrency business in recent years has contributed to an increase in fraud. Interestingly, criminals do not use new and sophisticated methods at all, but rely on old , battle-proven and tested practices.
By far the largest example of fraud is Bitconnect. Its founder, Satish Kumbhani, was accused by the US Department of Justice for, inter alia, setting up a Ponzi scheme (a financial pyramid) through a Lending Scheme. The accusation included charges of committing wire transfer fraud, commodity price manipulation and international money laundering. Originally, Bitconnect was supposed to guarantee investors a 40% return on their invest- ment. Ultimately, Kumbhani received approximately $2.4 billion from investors and disappeared with the money. He is still wanted to this day.
Another major scam that rocked the cryptocurrency world was Pincoin. This Vietnamese digital currency raised around $870 million from 32,000 people. The problem with Pincoin was that instead of being paid back in cash, investors were given tokens called iFan. Unfortunately, it was not long before Pincoin’s founders fled with all the investors’ money.
Chinese ACChain raised $80 million from investors but it soon became clear that there was something wrong with this cryptocurrency. Photographs of the headquarters, which turned out to be just an empty room, leaked to the public and at the same time the company disappeared without a trace along with the money stolen from investors.
This scam was highly publicized because the company behind Plexcoin was shut down by the US Securities and Exchange Commission (SEC) which ordered it to return a large portion of the scammed money out of a total of $20 million. The cryptocurrency initially promised investors a return of 1,354% but this turned out to be just an empty slogan used as a bait . These scams are just the tip of the iceberg. Every month there are new incidents that reverberate throughout the cryptocurrency world. It should be noted that Ronin Network lost $624 million, Wormhole $326 million and BeansTalk $181 million.