No End to Crypto Losses – The Overview of Recent Crypto Scams

Although blockchain technology and bitcoin market are generally regarded as a safe haven, it certainly is not fool-proof and still vulnerable to scams. To get how bad things are, let’s remind ourselves that in the Q3 of 2019 a total of $4.4B was lost to scams and fund misappropriation in the cryptocurrency sphere. The amount marks a 160% increase from the ‘paltry’ $1.8B which was lost during 2018.

According to the report published by Ciphertrace, crypto-related losses have hit an all-time high and the figure is fast approaching the $5B mark. With an increased volume of funds flowing through digital platforms, a rise in the number of scams was expected but the volume experienced in 2019 was unprecedented and has left many investors questioning the integrity of digital exchange platforms.

A Reflection Of More Brazen Scammers

The 150% increase in the amount of money lost to scams and fraudsters is a true reflection of how fraudsters have become more brazen and have devised new tactics of scoring big. Fraudsters are quickly adapting to the new layers of security that companies are setting up and they are constantly finding loopholes within the systems to exploit and siphon away users’ money.

The propensity of the new age fraudsters calls for collective concerted efforts, made by all the stakeholders in the cryptocurrency industry to try to maintain the threat. In order to come up with ways to prevent future scams, stakeholders need to be aware of existing scams and technologies used to obfuscate funds from various platforms.

Below you can see some of the most recent high-profile cryptocurrency scams which have shocked the world.


An overview of Recent High Profile Crypto Scams

1.   More Than $3B PlusToken Scam

PlusToken, in a sophisticated Ponzi scheme, managed to take more than $3B from its investors. New reports recently emerged claiming that the actual amount of money that might have been lost to scammers is actually way more than the reported $3B.

In this scam, the South Korean wallet PlusToken rolled out a very lucrative program in which they promised to highly reward all users who stored their assets and funds on their platform. According to the company, the rewards should have been in the form of referral bonuses and exchange profits within the platform. The lucrative incentives offered by the company saw more than 3 million users invest their funds and assets on the platforms before the company disappeared into thin air. Even though Chinese authorities arrested the people in charge of the company in June 2019, we still have no idea regarding where did the money disappear.

A published report pointed towards an outflow of some of the funds to a bunch of addresses but authorities rubbished those claims insisting that the case was still in court and a conclusive report would be released upon the conclusion of the high-profile institution.

2.   QuadrigaCX $190 Million Loss

The other scam that got the world talking is the Quadriga ‘scam’ which was very peculiar in nature. Although to many it is regarded as a scam of some sort, this case had a twist to it. The owner of the exchange platform died and more than $190million in investor funds and assets have disappeared together with his unfortunate passing.

At the time of his death in December 2018, Gerald Cotten had been entrusted with the funds of more than 115,000 users of the platform. Unfortunately for all these investors, only Gerald Cotten had access to the laptop on which the company claims all the funds were stored.

Although death is an unforeseen natural event, the twist in the whole story is the revelation by blockchain analysts that the wallets on the late Gerald’s laptop didn’t have any funds on them. There is no evidence regarding any funds or even existence of Gerald’s wallets on the blockchain which left many people shocked.

This interesting story left many believing that the CEO of Quadriga has faked his death in a bid to defraud his customers and make up for his company’s losses. But for now, the case is in court, awaiting the exhumation of the body of Gerald for forensics before a ruling is made. Until then, more than 115,000 users can only hope and wait.

3.   Upbit $50 Million Loss

More recently, Upbit, a cryptocurrency exchange owned and run by South Korean giant Kakao, reported in a press conference that they had lost more than $50 million worth of ETH from their wallet. In the press conference dated November 27, the company confirmed unauthorized access to their hot wallet and theft of 342,000 ETH which at the time were valued at more than $50 million.

In the press conference where the company profusely apologized to the affected users, it vowed to protect its users’ assets from similar future incidents but refused to rule out the possibility of the incident being a hack job. They also promised to refund all the stolen assets through the sale of corporate assets.

4.   Other Scams

Besides the 3 scams mentioned above, there are millions of other small scams that don’t make headlines but are indicative of the worsening security in the cryptocurrency world. From the loss of $1million BTC from Bittrex to the fake MyEtherWallet site scam which scammed people more than $7.57 million, there are numerous small scams that keep defrauding unsuspecting users of their hard-earned money and it is expected to get worse.



Due to advanced means of scamming used by fraudsters, stakeholders will need to come up with better mechanisms to curb unauthorized access into users’ wallets. In the other case, they are will be at risk of losing customers back to the fiat currency world.


This guest article was written by