3 MORE Crypto Scams that actually happened and what we can learn from it

This week we are focussing on Crypto scams, what types are there, how to recognize them and what we can learn from them. This article covers 3 more crypto scams that happened and had large impact on the industry as a whole

Scams that actually happened

1. BitConnect

Scam type:
Ponzi Scheme

Year: 2016

Amount lost: $2.4 billion


Satish Kumbhani, masterminded a global Ponzi scheme which allowed him to defraud investors for $2.4 billon. In 2016 Kumbhani started Bitconnect`s “lending program” that would trade on the global crypto markets based on proprietary trading bots and volatility software. The project was promoted for its ability to produce high and consistent profits. Simplified the idea implied: “Put 1 dollar ìn, get 1.4 dollars out guaranteed”, as profits of 40% were promised and guaranteed. On top of that another 20% bonus was promised on a daily basis. This made this an extremely attractive idea for many investors.

What happened in reality is that BitConnect ran a Ponzi scheme on its investors by passing on the money given to them by new investors to old investors. A scheme that continued to run for almost a year. When the lending scheme was shut down after that, the nature of the promotion actively shifted towards an attempt of pushing up the price of BitConnect`s digital currency, in order to create a false sense of demand.

In January 2018, after running nearly 2 years, Bitconnects board filed a cease and desist, and just like that. Bitconnect was no more, and the money invested went with it. 

Lessons learned:

  • If something sounds too good to be true, it probably is.
  • If somebody promises “guaranteed” returns, see this as a red flag. In markets, nothing is certain, ever. So don`t look for it.
  • If investment vehicles fail to publish earnings reports or if there is a lack of transparency towards investors, scratch behind your ears.


2. BitFinex hack

Scam type: Hack

Year: 2016

Amount lost: $4 billion

One of the biggest crypto hacks in the world. A whopping $4 billion lost and with money untraceable for nearly 6 years. Sounds like a major heist, doesnt it?

Known to be a creator of cringey rap videos on TikTok, Heather Morgan and her husband, Ilya Lichtenstein who ran cloud services and solutions business, were the hackers behind the 2016 BitFinex hack.

In 2016, Heather and Ilya were able to exploit a security breach in BitFinex. BitFinex is a Hong Kong-based cryptocurrency exchange platform, where said husband and wife were able to gain access to the exchange. Heather and Ilya were able to authorize over 2000 unapproved transactions, stealing 119.754 BTC, with a total worth of $72 million at the time, and at Bitcoins peak reached a valuation of $4 billion.

BitFinex did cover for the losses partially, and was able to remain in business and in fact came back strong as time passed, culminating over a generalized 36% loss overall.

Lessons learned:

  • Be aware of the risks of storing crypto in a “hot” or “ cold” wallet
  • Never store all of your assets in one place

4. Celsius Networks

Scam type: Phishing

Year: 2021

Amount lost: undetermined

In the early hours of April 14, 2021, users of a reward-earning cryptocurrency platform started reporting that they had received a suspicious email.

The email looked like it was an official Celsius announcement. The announcement told users that the much-anticipated “Celsius Web Wallet” had launched. The email included an offer of $500 worth of CEL for users who followed the included promo link.

However, some attentive users realized that the link led them to “celsiuswallet.network” instead of the official “celsius.network” domain, which indicated that something wasn`t right. Ce`lsius `ha`s always made it clear that they do not have any other official domain.

Unfortunately, as the destination page looked just like the legitimate company page, many users went ahead to claim the offer and submit sensitive information. Soon after, reports came in from users who had lost their crypto balance.


Lessons learned:

  • Have your guard up when you receive emails and messages from crypto platforms, as they might not be from the real platform owners.
  • Check the platform`s official site to confirm the details of the email or message before deciding to give away any information.
  • Even if the offer is exciting and sounds like a unique opportunity, take a step back and review it from a fresh perspective – something you previously missed might come to light.
  • Pay attention to the finer details and do not proceed if anything seems to be amiss.

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Disclaimer: 

The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.

All opinions expressed on Bitget’s Soapbox (also known as the ‘Soapbox’) are opinions of individual traders using the Bitget platform, and do not reflect the opinions of Bitget or its affiliate companies and partners. The Soapbox author’s opinions are based upon information they confirm to be reliable, but neither Bitget nor its affiliates warrant its complete accuracy, and it should not be relied upon as such.