The world of crypto is synonymous with innovation, opportunities, and financial freedom. But behind this promise lies a darker reality: that of colossal scams that have stolen billions and ruined lives. As investors, it is crucial to understand these scams to better avoid them.
This article examines three of the biggest frauds in cryptocurrency history, dissecting their mechanisms to help you stay vigilant.
1. OneCoin: The "killer Bitcoin" that never existed
Often referred to as the "biggest scam in history," the OneCoin scam was led by the charismatic Ruja Ignatova, dubbed the "Cryptoqueen." Between 2014 and 2017, OneCoin promised to become the new "killer Bitcoin," attracting millions of people worldwide.
The mechanism of fraud:
A sophisticated Ponzi scheme: Unlike a real cryptocurrency, OneCoin did not have a functional blockchain. Its "value" was entirely artificial, based on new money inflows. Investors were encouraged to recruit new members to earn commissions, creating a classic pyramid structure.
Mass marketing: Ignatova used grand events, press articles, and an aggressive network of distributors to legitimize her project. She promised astronomical returns, playing on the fear of missing out on the "next Bitcoin."
The lesson to remember: Beware of projects that promise guaranteed and unrealistic returns. A legitimate crypto is based on transparent and verifiable technology. If a project relies solely on recruiting new members to pay the old ones, it’s a major red flag.
2. The FTX crash: The biggest scandal of a centralized exchange
In November 2022, the crypto world was shaken by the sudden bankruptcy of FTX, one of the largest exchange platforms. Behind this collapse lay an unprecedented fraud, orchestrated by its founder, Sam Bankman-Fried (SBF).
The mechanism of fraud:
Illegal use of client funds: SBF secretly transferred billions of dollars from FTX user accounts to his trading company, Alameda Research. These funds were then used for risky bets, real estate purchases, and political donations.
Lack of transparency and governance: There was no separation between FTX and Alameda. Audits were lacking, and management was centralized around a small circle of SBF's close associates.
The lesson to remember: The saying "Not your keys, not your coins" has never been more relevant. Centralized exchanges hold your funds, and the case of FTX has shown the dangers of this trust. Prefer using non-custodial wallets (where you hold your private keys) for the funds you are not actively trading.
3. PlusToken: The largest Ponzi scheme on a fake wallet application
The PlusToken scam, which operated in Asia between 2018 and 2019, was a massive Ponzi scheme disguised as a crypto wallet application. It managed to siphon off more than $3 billion in digital assets.
The mechanism of fraud:
A fake wallet application: PlusToken promised daily returns of up to 300% per year if users deposited their cryptos into their "wallet." The app seemed legitimate and benefited from a network effect, with commissions for each new investor.
A massive movement of funds: Once the users' funds were collected, the scammers centralized and moved them complexly via the blockchain, making traceability difficult. They then converted these assets into cash, causing the team to disappear.
The lesson to remember: Be extremely skeptical of any application or "wallet" that promises to generate passive returns on your holdings. A real secure wallet is meant to store your cryptos safely; it does not generate magical gains. Scams often play on greed and the desire for "ease."
Conclusion: Your security is your responsibility
These three examples demonstrate that scams can take very varied forms: from promises of unrealistic returns to complex corporate frauds. Vigilance is your best defense.
Before investing in a project, do your own research (DYOR):
Is the team public and credible?
Does the project have verifiable technology (an open-source code, a testable blockchain)?
Are the promises of returns too good to be true?
By staying informed and applying these principles of caution, you can better navigate the world of crypto while protecting your hard-earned assets.
