The most famous scams in the history of crypto (TOP 3)

The most famous scams in the history of crypto (TOP 3)

By Roberto D. | CryptoFarm | 19 Jul 2020

Cryptocurrencies have many advantages: anonymity, accessibility, ease of use and low transaction costs, but it is undeniable that, to achieve mass adoption, there are still several obstacles to face. The main one is the relationship between cryptocurrencies and crime.

Anyone who has studied the subject knows very well that Bitcoin (BTC) is a very popular payment method among darknet scammers. In addition, cryptocurrencies are useful tools for anyone who wants to evade taxes, launder money or cheat investors.

Today he will tell you about the most famous pyramid schemes in the world of cryptocurrencies, which have raised billions of dollars by deceiving investors. These companies used so-called "Ponzi schemes", named after an American scammer of Italian origins who lived in the early twentieth century. These schemes do not produce goods or services: it is only network marketing, in which each member of the pyramid invites others, who invite others and so on, until the system is saturated.

The only people who make a profit from these systems are the organizers and, sometimes, the first investors, if they manage to withdraw their money on time. The other participants are left with debts and, in the case of pyramid schemes linked to cryptocurrencies, tokens of no value.


OneCoin is one of the major pyramid schemes in the crypto sector: it was active from 2014 to 2017, having stolen about 5 billion dollars from three million investors. The founder of OneCoin isRuzha Ignatova, a Bulgarian-born criminal. The scam took the form of the classic Ponzi scheme: participants received a reward for each new participant they invited.

Ignatova promised that OneCoin would soon become the most important cryptocurrency in the world, and that it would even "get Bitcoin out of the way", but this currency did not even have its own blockchain and was accepted as a means of payment only on the sites associated with the scheme.

The Bulgarian government publicly warned citizens of OneCoin-related risks, as it was not a financial instrument controlled by public regulators. But this did not hinder the expansion of the pyramid scheme, which also expanded abroad.

Shortly afterwards, the governments of the United Kingdom, Austria and Thailand also advised citizens not to participate in the operation. Italy and Germany even went so far as to prohibit OneCoin's activities and blocked accounts. Ignatova did not appear at the investor meeting he had planned in Lisbon, and his tracks have been lost since then.

The U.S. government has accused Ruzha Ignatova of fraud and money laundering: she now faces 25 years in prison, while some of her accomplices have already been brought to justice, such as her lawyer, brother and former business partner.




Another well-known pyramid scheme in the crypto sector was BitConnect: active from 2016 to 2018, it had anonymous developers behind it, whose leader was a man who used the pseudonym of Satao Nakamoto.

Participants had to buy BCC tokens and keep them stuck on a platform: the trading bot, at that point, would automatically generate profits by buying and selling based on the market at that time. Participants were promised a 40% return per month. According to BitConnect promoters, with an initial investment of $ 1,000, investors could have withdrawn $ 50 million in three years. Too good to be true.

The first known name to publicly criticize the project was Vitalik Buterin, creator of Ethereum, who pointed out that a 1% yield per day is a classic sign of a Ponzi scheme. Closely, Litecoin (LTC) founder Charlie Lee also expressed the same skepticism as the founder of Ethereum.

The UK government soon asked the company to publish its business model, but the scammers continued to participate in crypto events and attract new investors.

The American authorities intervened to end the scam, forcing BitConnect to cease operations: at that point the BCC token collapsed by 90%, the investors lost a total of 3.5 billion dollars and one of the organizers of the pyramid scheme ended up in prison . Divayesh Darji, BitConnect's India manager, was released on bail in 2019.




The most recent and branched Ponzi scheme of the last few years is PlusToken: founded in 2018, it was advertised on WeChat promising 10-30% monthly earnings: in doing so, it managed to cheat about four million people. The scammers invited their victims to study the basics of finance and to use cryptocurrencies, but in reality they just wanted to sell them their tokens.

In this case, the police force managed to track down the organizers of the scam, and a year ago six of them were arrested by the Chinese authorities. However, the $ 3 billion stolen from investors has not been recovered, and is still available to PlusToken members. A month ago, on June 22, 2020, all EOS were withdrawn from the wallets connected to this scam; shortly thereafter, the same happened with all ETH tokens.



Although these pyramid schemes are no longer active, they often come to light of their "reincarnations" which attract novice investors. Governments cannot protect citizens from these risks indefinitely, because in order to proceed there is a need to prove the commission of a crime: therefore, the best defense is always information.

If everyone understood that the huge profit margins promised by some companies are often a worrying sign and not a gold mine, there would be less cheating.

In general, I believe that the world of cryptocurrencies offers good opportunities, to those who know how to seize them, and to those who are lucky enough to make the right investment at the right time.

I sincerely feel sorry for all those who fall into a scam, both those who are beginners and the more experienced can fall into more or less complex scams. The truth is that if someone asked you for $ 100 promising to give you $ 1000 in a month, I hardly believe that someone would give them $ 100, but apparently the mental mechanisms that are generated with the magic word "cryptocurrency" make you lose common sense a little bit at all.

And what do you think of it? Because of these scams, cryptocurrencies will always be considered only a speculative asset (and for the purposes of a scam), or sooner or later people will understand that if something is too beautiful it probably isn't true?

Thanks if you read this far, and see you next time!


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Roberto D.
Roberto D.

Born, and still living, in Italy. Passionate about cryptocurrencies since I discovered ethereum in 2016


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