The risk of fraud in the world of crypto currencies

The risk of fraud in the world of crypto currencies

High risk of fraud for investments in cryptocurrencies: 4.5 billion holes in 2019

Illicit financial transactions have resulted in huge losses for cryptocurrency investors. Many people, taken by enthusiasm, have staked everything on the “crypto boom”, although one must be cautious in the face of the promise of explosive returns.

Someone has grown rich, of course, but many have lost their money. It is a risky market, where fraud, fraud and theft have often ended up emptying the portfolio of inexperienced investors.

Cryptocurrency crimes increased in 2019 causing an overall loss to users of approximately $ 4.52 billion: 160 percent more than in 2018, when a hole of $ 1.74 billion was estimated.

This was revealed by a report by the Cipher Trace organization, specialized in the fight against crypto crime.

If in the past the pitfalls have been hacker attacks and online thefts, the biggest damage in the last 12 months has been caused by the Ponzi scheme, exit scams and other forms of financial fraud related to digital currencies.

Just these latest fraudulent transactions increased by 533 percent: a shortfall of 4.15 billion, compared to 654 million in 2018.

Otherwise, thefts and cyber-attacks decreased by 66 percent, falling to 371 million compared to the billion a year earlier.

Comparison of financial fraud, hacker attacks and cryptocurrency theft – ChiperTrace

The graph indicates that the greatest danger comes from those who operate within the exchange platforms, as evidenced by some stories collected by the authors of the report.

These are some of the scams and financial transactions that ended badly during 2019 worldwide, which have caused enormous damage to investors, with negative repercussions on the entire cryptocurrency ecosystem.


It was one of the cases that caused the 2019 spike in losses. Users who trusted this popular trading platform saw $ 135 million go up in smoke after the unexpected death of the Canadian company’s co-founder on his moon. honey in India.

Gerald Cotten was in fact the only person to own the keys to access digital wallets containing approximately 180 million Canadian dollars in digital currencies. Investors, assisted by their own lawyers, requested that the body be exhumed to check that it is actually Gerald Cotten and to understand what were the causes of the death: rumors have circulated that the co-founder of QuadrigaCx pretended to die to escape with the loot.

In fact, these speculations have not been reflected: the man died of some complications related to Crohn’s disease. In any case, this tragedy led to the closure of the exchange platform, which then had about 115 thousand users.

The big Ponzi schemes of BitClub Network and OneCoin

This criminal operation cost investors $ 722 million: persuaded to finance a team of miners engaged in extracting cryptocurrencies, they were promised a slice of the proceeds. Unfortunately, however, their dream of getting rich by trafficking with digital coins was short-lived. As stated in the report, the victims “were encouraged to recruit new investors”.

For this purpose, a website was also created, which urged people to participate: “Get daily profits from all the bitcoin that your team earns”. Money that has never been seen: on the contrary, several people have found themselves poorer than before, with thousands of dollars less. Not only that: the scammers who had set up the Ponzi scheme continually exchanged emails in which they mocked the unfortunate, calling them “stupid” and “sheep”. Truly miserable people!

Another pyramidal scam is the one linked to the OneCoin cryptocurrency: the platform was closed last November, after the American authorities charged one of its founders for a gigantic multi-billion-dollar fraud.

A colossal international Ponzi scheme that was based on the commercial promotion of the OneCoin cryptocurrency. Under accusation Konstantin Ignatov, considered one of the leaders of the organization that is collaborating with the authorities, and his sister Ruja, called “Crypto Queen”, who disappeared into thin air.

The scheme operated at several levels: members received commissions to convince other people to buy digital currency. As a press release from the New York Southern District attorney recalls, “OneCoin Ltd. said it has over 3 million members worldwide, including victims of New York. The surveys showed that, between the fourth quarter of 2014 and the third quarter of 2016, the company generated over 3.353 billion in revenues and earned profits of 2.232 billion “.

Einstein Exchange

The Vancouver-based Canadian platform closed its doors on November 1, after being accused of a $ 12 million hole: according to the British Columbia Supreme Court, Einstein Exchange cannot return the money to its customers since its funds amount to about $ 34,000 in cryptocurrency. Investigations by the authorities began in May 2019, following some consumer reports and suspicions of money laundering.

Initially, the company explained that it was preparing to lower the shutters in a maximum of 60 days, after the failure to negotiate the sale of the business to a US company. At that time, the exchange platform had reiterated that it had the necessary funds to repay investors. Thus, the commission charged with conducting the investigation tried to verify this claim, asking for enlightenment from Einstein’s lawyers. Unfortunately, however, they replied that they knew nothing, since they no longer legally represented the platform.

Cryptocurrency scam boom

Subjects located in tax havens that offer trading services, in binary options or on forex, based on the use of software (forex-robot, robot advisor, expert advisor and / or trading system) that process “investment decisions” and who can automatically execute orders on online trading platforms without the investor having the perception of what is really happening to his investment.

contracts related to the alleged sale of precious goods, with the possibility of investing in “packages” for the purchase of diamonds / ingots and gold coins to which the promise of periodic returns was linked with the possibility for the investor to regain possession also of the sums paid for the alleged purchase of the asset without ever acquiring the actual availability of the asset itself.

Or again: square meters of rainforest in Central America “sold” on social networks and paid in cryptocurrency, with a fixed annual return related to the capital invested, the amount of which varied according to the plot purchased (which then was not purchased at all, since the deeds presented as sales were waste paper). These are some of the scams that took place in 2018.

The scams in brokerage for savers have multiplied in “impressive dimensions” thanks to the web and social networks, hence the question:

How will you defend yourself?

Here are some helpful tips for avoiding (or at least reducing the risk of) online scams.

First of all, prefer official and notoriously reliable sites, to make this first evaluation let’s trust experience and common sense.

Be wary of too convenient offers.

Before making investments, we use our favorite search engine to identify any comments and feedback from scammed or simply unsatisfied users.

It is also important to verify that the web portal where you want to buy is equipped with the https protocol (a requirement attested by the presence of a closed padlock in the address bar), which guarantees that the connection between your computer and the site is protected and secure. The presence of this protocol represents a quality certification of the site, in addition to ensuring that user data is not tracked when browsing the portal.

The choice of the method of payment is also a determining factor in avoiding scam attempts.

Do not use credit cards attached to your bank account if you want to avoid drying up. Better to use prepaid cards with a minimum amount.

Do not trust the sms or the email that invite you to click a link and enter your access data. The risk is that the link refers to a fake site, graphically similar to the institutional one, where if you go to enter your access data (user and password) which will then be used for illicit purposes (this is the known phishing practice).