6 Notorious Cryptocurrency Scam Schemes and How to Protect Yourself


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What are Crypto Scams?

Crypto fraud is the fraudulent transaction of individuals’ digital assets, especially cryptocurrencies. As crypto investments and the use of digital wallets have evolved, so have the tactics of scammers.

Common scams use a range of techniques, from fake celebrity endorsements to social media phishing and scams that take advantage of people’s trust and curiosity.

Victims are often tricked into paying or revealing sensitive information such as crypto wallet details.

Types of Crypto Scams

Like elusive shapeshifters in dark fairy tales, crypto scams change and adapt in countless ways. Scammers, often deceitful, have come many ways to navigate the crypto asset landscape.

Below, we’ve highlighted six of the most common crypto fraud schemes, each with chilling stories paired with real-life incidents. Proceed with caution.

1. Rug Pull Scams

In the cloudy alleys of the cryptocurrency world, carpet-pulling scams are the goblins who prey on investors’ dreams.

These evil creatures dazzle their victims with shiny new signs or projects, only to disappear into the night, leaving behind worthless coins and shattered hopes.

Here’s how the trick goes: Scammers think of an attractive investment opportunity, often using the coattails of the latest trends like NFTs or DeFi.

As the hype builds and investors pour in, these goblins rush out and sell their tokens or liquidate their positions. A once-promising investment falls apart, leaving investors with only ghostly signs.

A reward of up to $250,000 is being offered by the FBI for information that results in Ruja Ignatova’s capture.

The OneCoin story is one of the most fascinating in the annals of cryptography. Led by the enigmatic Ruja Ignatova, known as the “Crypto Queen,” OneCoin took an astonishing $4 billion from unexpected victims.

Through great stories and convincing pitches, Ruja painted a picture of legitimacy and morality.

However, beneath the glitz and glamour, OneCoin was anything but a mirror. By promising huge profits, he left a path of financial corruption.

As the scheme unfolded, the crypto queen fled, leaving behind a legacy of fraud and countless duped investors.

The sign of the squid game
Taking on the popularity of the Netflix series, Squid Game looked like a token golden goose.
However, according to the panic report, developers cleared its liquidity pool and withdrew funds from users.
The infamous carpet yank was captured live by a Twitch streamer, showing the currency’s market cap plummeting from trillions to zero in a heartbeat.
Planet of the Mutant Apes

Mutant Ape Planet (MAP) NFTs, a shadow of the popular Mutant Ape Yacht Club, lost $2.9 million from its developer.

Aurelien Michel, the leader, was eventually arrested, but not before leaving a trail of broken promises and empty wallets. He promised prizes, raffles, and “metaversal land,” but they all vanished like a mirror.

2. Bitcoin Investment Schemes

In the cryptocurrency continent, some investment schemes are disguised as legitimate opportunities. Often decorated with glossy websites and enticing promises, these schemes aim to deceive.

Investment fraud can take many forms. Some are disguised as new features in blockchain technology, while others may use the façade of new digital currencies on the market.

Plexcoin: SEC’s first ICO hit

Launched in August 2017, Plexcoin promised its investors an astounding 1,354% return in less than 29 days. Riding the wave of the ICO (Initial Coin Offering) boom, its aggressive marketing strategies have managed to attract a lot of investment. But such stellar returns quickly raised doubts.

The US Securities and Exchange Commission (SEC) was quick to respond. In December 2017, the newly created Cyber Division of the SEC filed its first ICO charges against the Plexcoin organizers.

The SEC froze all assets related to Plexcoin after it charged the scam’s mastermind Dominique Lacroixman with defrauding investors.

Lacroix and his partner, Sabrina Paradis-Royer, were found guilty of misappropriating investor funds and other fraudulent activities.

Bitconnect: A cautionary Tale

Emerging on the cryptocurrency scene in 2016, Bitconnect quickly gained traction with its aggressive marketing and attractive promises of massive returns. The platform claims that its business bot buys and sells bitcoins, making huge profits.

Investors are lured by daily returns of up to 1%, which add up to nearly 40% monthly returns, even more impressive when returns are compounded annually.

However, there was another trick. Investors would have to lock up their funds for between 120 and 299 days depending on their investment. Bitconnect has also had its fastest growth, introducing a multi-tiered reference system that shows the classic signs of a Ponzi scheme.

The façade was shattered in January 2018 when Bitconnect abruptly shut down its lending and exchange services. They cited bad press, regulatory problems and cyberattacks as reasons.

The shutdown left many investors without access to their money. Bitconnect is known for using new investments to provide returns to previous investors, a hallmark of Ponzi schemes.

Plexcoin and Bitconnect both emphasize the importance of due diligence and care in the cryptocurrency domain. High returns can be exciting, but investors should always be skeptical and cautious.

3. Fake Cryptocurrency Exchanges

In the complicated labyrinth of the cryptocurrency world, some exchanges stand as mirrors, promising exciting rates and unparalleled returns.

These platforms that offer prices that seem too good to avoid often have a hidden catch.

These fraudulent exchanges can demand large upfront fees, touting impressive profits and testimonials from “successful” investors.

But once these funds are released, they often dry up, putting investors at a disadvantage.

Gox Mountain

Once a dominant force in Bitcoin exchanges, Mount Gox faced its 2014 crash. At the time, 850,000 bitcoins, worth about $450 million, went up in smoke.

Theories suggest that they were stealing for years and were hiding them until the platform collapsed.

The Disappearance of Todox

Thodex, the Turkish cryptocurrency exchange founded in 2017, made headlines in 2021 when it disappeared with more than $2 billion in investors’ money.

The exchange’s founder Farouk Fatih Ozer was initially concerned about cyber attacks and assured investors that their money was safe. But it soon got out of hand.

By 2022, he was closed by the authorities in Albania. This online exchange failure accounted for a significant portion of the total value lost to 2021 fraud.

Ozer and his co-conspirators are now facing court proceedings that could result in severe penalties.

Be careful and thoughtful while navigating the crypto landscape. It makes sense to tread carefully on promises that seem overly ambitious.

4. Ponzi Schemes

Ponzi schemes are an important trend offering huge returns to attract new crypto investors. These schemes rely on income from new participants to repay old participants, creating the appearance of profit.

While the concept of Ponzi schemes is as old as haunted castles, the adaptation to the cryptocurrency world presents new challenges. These platforms often make huge profits from crypto investments and can present themselves as legitimate with misleading testimonials or falsified statistics.

We touched on interesting stories about OneCoin and Bitconnect, both of which were cryptographic incarnations of Ponzi schemes. Here are some notable examples.

PlusToken Ghost

Hailing from China, PlusToken has established itself as a global cryptocurrency wallet that rewards users with huge returns for investing their assets. Promises of returns ranging from 10% to 30% a month quickly attracted many investors.

PlusToken operated in a classic Ponzi structure. Previous investors were paid with new membership fees. To support this mechanism, the platform needed a steady flow of new investments.

Until it was exposed, PlusToken had defrauded more than 715,000 investors of nearly $6 billion. This is one of the biggest cryptocurrency scams in history.

The scheme began to deteriorate when users struggled to withdraw their money. Chinese authorities acted swiftly, arresting 109 people involved in the scam in July. Six of them were charged with fraud.

An awesome echo of WoToken

WoToken was a Chinese Ponzi scheme reminiscent of PlusToken that promised high returns on cryptocurrency investments.

Like PlusToken, WoToken attracted investors with promises of high returns, especially from its “intelligent trading system.” This system was sold on various platforms and profitable for investors.

WoToken has successfully defrauded its victims of over $1 billion. Court documents showed that 715,249 investors were defrauded of a total of about 7.7 billion yuan ($1.15 billion).

The striking similarities between WoToken and PlusToken were not superficial. Investigations revealed that one of PlusToken’s main operators was heavily involved in WoToken, which many referred to WoToken as “PlusToken 2.0”.

These scheme operators were arrested in 2020, ending a massive crypto Ponzi scheme.

Both reports serve as a warning about the hidden risks in the cryptocurrency world. While high yields can be attractive, investors need to be careful and cautious.

5. Cheating in Romance

Romance scams are gaining popularity because of their unique appearance. Crypto scammers, like delicate sirens, use dating platforms to weave tales of love, only to lure their victims into a financial trap.

By creating attractive profiles, crypto scammers build trust and emotional connections. As the relationship grows, they may ask for help with loans, ask for money for a planned meeting trip, or even make a questionable crypto investment. But once the money is transferred, it disappears, leaving behind heartache and financial loss.

Several Cases made Headlines:

Losing AUD 600,000: In 2018, an Australian woman was convinced to invest in a fake cryptocurrency-related business by posing as a fraudster, a successful entrepreneur.

£1.2 million payout in UK: British woman defrauded of £1.2 million over two years. Since 2017, the fraudster has lured him into investing in non-existent gold and diamond businesses, including cryptocurrencies.

CAD 340,000 Bad: In 2020, a Canadian woman was lured into a fake cryptocurrency scheme by a scammer posing as a wealthy businessman.

As you navigate the cryptocurrency world, remember that not every heartfelt prayer is true. Be alert and beware of those who mistake romance for money.

6. Phishing Scams

Phishing scams are an insidious threat to cryptocurrency enthusiasts. Fraudsters use deceptive tactics in order to disclose sensitive information, such as wallet keys.

Another common trick is to send fake emails or messages following genuine cryptocurrency platforms. They often come with immediate warnings, prompting users to act quickly and inadvertently leading them to share their keys.

Once the fraudster gets hold of the keys, the victim’s crypto assets can vanish like a ghost overnight.

To protect yourself, it’s important to use strong passwords, use two-factor authentication and critically evaluate every connection for authenticity.

About MyEtherWallet

In 2018, the shadow figure focused on MyEtherWallet users. Through a DNS attack, users were redirected to a malicious MEW. Many have accidentally injected their private keys, allowing attackers access to their funds.

This incident highlights the importance of surveillance and constant monitoring of the security of online platforms.

Concluding Remarks
In conclusion, the rise of cryptocurrency is changing the perception of money, and individuals need to be vigilant. High investment returns can sometimes be as deceptive as a siren’s song or a magician’s spell.

Fraud schemes are becoming more sophisticated, often using social media platforms to spread their deceptive messages. It’s important to be skeptical about offers that require payment up front and always do your due diligence.

While the digital age offers us opportunities as vast as the night sky, it also requires us to keep our caution lights on to ensure that our digital investments are not forgotten.

Disclaimer: Please note that the information in this article does not constitute financial or investment advice. The information contained in this article is solely the opinion of the author and should not be construed as commercial or investment advice. We make no warranty as to the completeness, reliability or accuracy of this information. The cryptocurrency market suffers from high volatility and random free movements. Any investor, trader or regular user of cryptocurrency should search for many considerations and be aware of all local laws before investing.


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