Welcome to the wild world of crypto investing, where fortunes can be made overnight and scams lurk around every digital corner. It’s like the Wild West, but with more acronyms and less tumbleweed. While the cryptocurrency market has seen unprecedented growth in recent years, it has also attracted its fair share of scammers and fraudsters. These crooks have preyed on unsuspecting retail investors, promising them riches beyond their wildest dreams. But instead of lambos and yachts, these investors were left with empty wallets and a sinking feeling of regret. In this article, we’ll take a closer look at some of the biggest crypto investing scams in recent years and what you can do to protect yourself.
Let’s take a look at some of the biggest crypto investing scams for retail investors in recent years.
- BitConnect
Perhaps the most notorious crypto scam of all time, BitConnect was a Ponzi scheme that promised investors huge returns through a lending platform. Investors could lend their BitConnect coins to the company and receive interest in return. The more coins they lent, the higher the interest rate they would receive.
At its peak, BitConnect was worth over $2.6 billion, and the company’s promoters promised investors returns of up to 40% per month. But in January 2018, the scheme collapsed, and the value of BitConnect dropped from over $400 to less than $10 in a matter of days.
The fallout from the BitConnect scam was massive, with investors losing billions of dollars in total. BitConnect’s founders were eventually arrested and charged with fraud.
- OneCoin
OneCoin was another crypto scam that promised investors huge returns in a short period of time. The company claimed to be a cryptocurrency that was backed by gold, and it was promoted heavily through social media and online advertising.
Investors could purchase OneCoin tokens, which they could then use to buy products or convert back into cash. But the company never actually had a blockchain, and the tokens were essentially worthless.
OneCoin’s founder, Dr. Ruja Ignatova, was indicted on charges of wire fraud, securities fraud, and money laundering in 2019. She is currently on the run and has been labeled as one of the world’s most wanted criminals.
- PlusToken
PlusToken was a crypto wallet that promised users high returns on their investment. The company claimed to be a legitimate investment platform, but in reality, it was a Ponzi scheme that stole millions of dollars from unsuspecting investors.
At its peak, PlusToken was worth over $3 billion, and the company’s founders used aggressive marketing tactics to lure in new investors. But in June 2019, the scheme collapsed, and the company’s leaders disappeared with billions of dollars in investors’ funds.
According to Chainalysis, a blockchain analytics firm, the PlusToken scam is estimated to have defrauded investors out of more than $2.9 billion in total.
- Bitpetite
Bitpetite was a crypto investment platform that promised investors high returns through a cloud mining service. The company claimed to have a team of experts who would mine Bitcoin on behalf of investors and pay them back with a profit.
But in September 2017, the company abruptly shut down, and its founders disappeared with investors’ funds. Bitpetite is estimated to have stolen over $5 million from its investors.
- Prodeum
Prodeum was a little-known crypto startup that claimed to be working on a blockchain-based platform for the fruit and vegetable industry. But in January 2018, the company’s website disappeared, and a message was left in its place: “penis.”
It’s unclear what happened to Prodeum or why its founders decided to pull such a bizarre stunt. But the incident highlights the risks of investing in little-known crypto startups that may not have a solid business plan or a track record of success.
The impact of crypto scams on retail investors
The impact of crypto scams on retail investors can be devastating. Many investors put their life savings into these schemes, hoping to make a quick profit, only to lose everything.
According to a report by CipherTrace, a blockchain security firm, crypto scams and fraud resulted in losses of over $1.9 billion in 2020 alone. This represents a 50% increase from the previous year. And unfortunately, the trend seems to be continuing into 2021.
In addition to financial losses, victims of crypto scams can also suffer from emotional distress and mental health issues. Many feel embarrassed and ashamed for falling victim to a scam, and they may struggle to trust future investment opportunities.
How to protect yourself from crypto scams
The best way to protect yourself from crypto scams is to do your research and be cautious. Here are a few tips to keep in mind:
- Don’t fall for too-good-to-be-true promises. If an investment opportunity promises huge returns in a short period of time, it’s likely a scam.
- Research the company and its founders. Make sure the company is legitimate and has a solid business plan. Look up the founders on LinkedIn and other social media platforms to see if they have a reputable background.
- Be wary of social media and online advertising. Scammers often use these platforms to lure in victims. Don’t trust ads or posts that seem too promotional or spammy.
- Keep your private keys secure. If you’re investing in cryptocurrency, make sure to keep your private keys and passwords safe. Don’t share them with anyone, and use a secure storage solution like a hardware wallet.
- Use reputable exchanges and wallets. Stick to well-known exchanges and wallets with a good reputation in the crypto community.
Crypto investing can be a great way to diversify your portfolio and potentially earn a profit. But it’s important to be aware of the risks and take steps to protect yourself from scams.
The BitConnect, OneCoin, PlusToken, Bitpetite, and Prodeum scams are just a few examples of the types of schemes that exist in the crypto world. By doing your research, being cautious, and keeping your private keys secure, you can reduce your chances of falling victim to these scams and enjoy a successful crypto investing experience.
