A Glimpse into the World’s Most Expensive Cryptocurrency Fraud Cases

Too Good to Be True

Trading cryptocurrency is becoming increasingly popular. This upsurge in visibility has been recognized by governments around the world, crypto experts, and laymen alike. One group, though, isn’t as welcome as the others: scammers.

An equal rise in cryptocurrency-related crimes and malpractices have been witnessed on the tails of all this. Moreover, the most notable crimes relate to cryptocurrency trading scams, binary options scams, and Cryptojacking. Cryptojacking occurs when a hacker uses a computing device to mine crypto on a target’s device using the victim’s processing power – without the target’s knowledge, of course.

Cryptojacking is pretty common, it affects one out of every 500 sites hosting a mining script, according to a recent study from Braunschweig University of Technology in Germany. Specifically, the research team conducted their study on the frequency of Cryptojacking in the Alexa top one million websites. Although some higher traffic sites benefit greatly from the practice, most only reap minimal returns. For example, the majority of the websites using Cryptojacking on average make only $5.80 a day.

The United States Securities and Exchange Commission (SEC) has warned against trading digital assets on potentially unlawful online platforms. However, it can be difficult to discern the legitimacy of cryptocurrency investments. Notably, any claims like ‘risk-free investment’, ‘low risk, high return’, ‘be a millionaire in one year’, or ‘get-rich quick’ are always easy tells that you’re dealing with a scammer. If it seems too good to be true, it probably is.

Most Notable Cryptocurrency Fraud Cases

It’s evident that cryptojacking, among other nefarious practices, is common and widespread. Let’s take a look at some of the most notable fraud cases surrounding crypto – and hopefully learn a lesson in what not to do.

~$733 Million. Bitconnect was a high-yield investment Ponzi scheme that closed shop in early 2018. It had all the makings of a pyramid scheme – it even used a “referral bonus” system via YouTube. The platform was built on recruiting more and more users in order to reap higher rewards.

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Credit: BitConnect News website

The North Carolina Secretary of State’s Securities Division warned investors against any involvement with the troubled Exchange. The warnings stemmed from unauthorized sale of securities, as well as the multi-level referral system at the exchange with the promise of up to 40 percent earned interest. Before closing, the company was seeking to sell 11.76 million BCCX, which could have brought its total assets to $733 million.

~$666 Million. One of the biggest digital frauds in cryptocurrency history was reported in Ho Chi Minh (HCM) City in Southern Vietnam. Modern Tech advertised a new coin to potential investors, promising them a high monthly interest in cash and a short timeline for payback – the catch? They had to buy at least $1,000 worth of the crypto. After a policy change from the company, the coin’s value fell to about one penny. The case amounted to VNĐ15 trillion ($666 million USD) and affected 32,000 people, according to Việt Nam News.

~$600 Million. In January 2018, The SEC took action again AriseBank, an aspiring crypto bank, freezing their assets and halting their ICO. Arise had launched “AriseCoin” in hopes of raising $1 billion USD via investors to become the world’s first “decentralized” bank. However, the project – which had been endorsed by boxer Evander Holyfield – scammed investors of approximately $600 million USD after fraudulent filings.

~$35 Million. 22-year-old Aarni Otava Saarimaa, a Finnish Bitcoin Millionaire lost $35 million USD in a cryptocurrency scam. In total, Otava lost approximately 5,564 bitcoins after sending them to scammers in Thailand, according to Bangkok Post. The fraudsters duped him into investing in a new cryptocurrency called Dragon Coin, as well as a casino. The culprits included soap opera star, Jiratpisit Jaravijit aka “Boom,” and his brother Thanasit Jaravijit. According to The Nation, “Police say their bank accounts showed several hundred million baht in deposits reportedly derived from the conversion of the cryptocurrency units transferred by Finnish owner Aarni Saarimaa for bogus investments in Thai stocks and other assets.”

~$30.8 Million. In Mumbai, Ruja Ignatova and 23 others were arrested in connection to a OneCoin pyramid Ponzi scheme, according to The Indian Express. The men promised investors the value of the coins would peak in December 2018, resulting in a huge payout after a one time investment of Rs11,900. That payout never happened. Chinese Authorities seized assets totaling to 200 million RMB ($30.8 million USD), prompting the Italian Antitrust and Consumer Protection Authority to ban the promotion of OneCoin in Italy.

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Grace Muthoni
Grace Muthoni is a Staff Writer for Block Telegraph. She is a Crypto Enthusiast and covers topics relating to the digital currencies and the Blockchain. She studied Economics and is well vested with numbers, statistical analysis, data presentation and quality content writing.

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