Cryptocurrency trading shot to prominence around 5 to 10 years ago now, as soon as the press coverage increased and people learnt more about it they decided to have a go at it themselves because they’d heard just how much money could be made from it. Here we’ll take a look at some of the biggest cryptocurrency scams to hopefully make sure you won’t be a victim of one in the future.
OneCoin ($25 billion in losses)
OneCoin was founded by Karl Sebastien Greenwood who was claimed to be earning upwards of $21m per month from the company. Whilst it was supposed to be mining coins, allowing people to buy them and then reporting profits, in actual fact it turned out to just be a giant pyramid scheme. The company reported that between 2014 and 2016 it had made around $2.5bn in profit but in actual fact the company was simply artificially inflating its price alongside taking customers money for themselves. The way OneCoin grew was to offer commission to customers who managed to sign someone else up and as always with pyramid schemes, the ones at the top like Greenwood got rich and the ones in the middle and bottom lost everything. The site was shut down in January 2017 with Greenwood eventually arrested in Thailand in 2018.
Bitconnect ($4 billion in losses)
Following on from OneCoin, BitConnect was another Ponzi scheme offering impossibly high payouts to customers who were effectively lending the value of a BitConnect Coin in return for interest payments. As with all of these schemes, the interest payments are way higher than normal to attract people in but further down the road those returns disappear along with the rest of your money when you can no longer withdraw your money. People would quickly be looking for crypto recovery lawyers to try and salvage some of their savings. In November 2017 the UK issues a notice to the company to prove its legitimacy, in January 2018 Texas state securities board issues a cease and desist and 2 weeks later the company shut down.
FTX Trading Ltd ($8 billion in losses)
FTX was launched in 2019 and its popularity soared in the following months. Unlike OneCoin, FTX was a trading platform enabling customers to buy and sell coins and make (or lose) a lot of money in the process. It also enabled you to convert your cryptocurrency in to cash. Until late 2022 FTX was one of the worlds leading trading platforms and was worth in the region of $32bn but by November 2022 it all came crashing down. At first it was suspected that there had been an accounting oversight but it turned out to be major fraud. Customers money wasn’t going in to the FTX bank account, it was going in to account controlled by Alameda Research a trading firm in Hong Kong (which had been founded by the same person as FTX). The accounts showed the company had $9bn in liabilities and only $900m in assets leaving a negative $8bn balance. Alameda had been borrowing as much capital as it needed to invest from customer deposits through FTX and in the end a lot of people lost a lot of money. It is no wonder there are now so many cryptocurrency scam recovery companies around.