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The Biggest Cryptocurrency Scams (And How to Spot One)

Written by Samuel Taube
Posted March 8, 2020

The 2010s was quite a lucrative decade for fraudsters. It saw Elizabeth Holmes bilk investors in her hematology company Theranos out of almost $9 billion after it turned out that her revolutionary blood-testing technology didn’t actually work. 

And it also saw the birth of a whole new type of white-collar crime: the cryptocurrency scam. 

The rise of cryptocurrencies — or decentralized digital currencies based on blockchain algorithms — collectively made up one of the biggest financial news stories in recent memory. 

Bitcoin, which traded for literal pennies at the beginning of the decade, surged to a price of almost $20,000 per coin in late 2017 before crashing back down to a few thousand dollars. And smaller cryptocurrencies — known as “altcoins” — have experienced even bigger swings in even shorter periods of time. 

But the cryptocurrency space is completely unregulated — making it fertile ground for scammers and fraudsters. 

And indeed, several cryptocurrency scams came in just behind Theranos as some of the biggest financial crimes of the last decade.

Today, we’re looking at the biggest cryptocurrency scams which have hit investors in recent years — and learning about the telltale signs of these crimes.  

The Biggest Cryptocurrency Scams of the 2010s


Cryptocurrencies are technically-complicated products, and scammers have often taken advantage of the fact that people invest in them without having a solid understanding of how they work. 

That’s what happened with OneCoin, a cryptocurrency scam that wasn’t actually a cryptocurrency at all. The Bulgarian company which issued the “coin” never actually developed a blockchain for it, nor did they ever get it listed on any mainstream cryptocurrency exchange. 

OneCoin was essentially a Ponzi scheme that marketed itself as a cryptocurrency and spread through pyramid-scheme-like multi-level-marketing tactics, in which early investors convinced their friends and relatives to buy-in. 

And unfortunately, that scheme fleeced investors out of roughly $4 billion worldwide before its issuing company abruptly shut down in 2017. Many of the victims lived in developing countries. 


Another common type of cryptocurrency scam is the high-yield cryptocurrency investment program — a Ponzi scheme variant exemplified by Bitconnect. 

Bitconnect was a cryptocurrency connected to a high-yield lending program,, in which users could trade Bitcoin for Bitconnect, lock in its instantaneous value for a set period of time, and then receive interest payments from the “cryptocurrency loan” that they made. 

These “loans” advertised impossibly high payouts (1% daily compounded interest) and were based on a lending infrastructure, which, as you can see from the paragraph above, doesn’t make much sense. 

In January 2018, the administrators of the cryptocurrency abruptly shut down the lending platform and distributed the value of all outstanding loans in Bitconnect coins — which, due to the shutdown of the lending platform, had become essentially worthless. 

Thus, investor confidence was destroyed, and the coin crashed in value from an all-time high of nearly $500 in December 2017 to just $0.40 by the end of January 2018. 

Pincoin and iFan

Some cryptocurrency scammers don’t even bother to pretend that their cryptocurrency is legitimate. They simply gather seed funds from investors through a fake initial coin offering (ICO) and then disappear, leaving their early backers in the lurch.

That’s what PinCoin and iFan did back in April of 2018 — and they stole some $660 million from 32,000 ICO investors in the process. 

Like the Bitconnnect fraudsters, Modern Tech, the Vietnamese company which issued these two “cryptocurrencies,” promoted them as components of a high-yield investment program. But unlike the Bitconnect perpetrators, they never even went through the trouble of setting up a fake lending platform. 

After the two coins’ blockbuster ICOs in early 2018, investors noticed that the interest payments they had been promised weren’t coming — and organized a protest outside of Modern Tech’s Ho Chi Minh City headquarters. 

But when they got there, they found an empty office building — and a landlord who told them that the company had actually moved out and disappeared a month before its supposed ICOs.  

Victims of these three scams ultimately were taken advantage of because they were buying something they didn’t understand. Due diligence is key in the world of cryptocurrency investing. 

To that end, let’s learn about some research practices which could help you avoid becoming the victim of the next OneCoin, Bitconnect or iFan. 

How to Avoid The Next Big Cryptocurrency Scam

Research the Team

The developers and administrators of a cryptocurrency project can make or break it. Scammers know this — and create large teams of fake advisors with made-up names, stock photos, and impressive (but fake) credentials in order to give their scams a sense of legitimacy. 

Thus, one of the easiest ways to spot a cryptocurrency scam is to research its team. If the advisors and backers listed on a cryptocurrency’s website can’t be found on common social media sites like LinkedIn or Facebook, that’s a red flag. 

Read the Whitepaper

One hallmark of legitimate cryptocurrencies is a well-written whitepaper — a prospectus detailing how the currency works, what its purpose is, and what kind of returns investors should realistically expect from it.

Not having a whitepaper is an extremely obvious sign of a cryptocurrency scam — but unfortunately, scammers know this as well, and will often write a dishonest whitepaper to make their scheme look real.

However, scam whitepapers are often sloppily-written, or plagiarized from legitimate whitepapers — and thus there are ways investors can spot them. 

Gratuitous spelling, grammar, and formatting errors are all causes for concern in a cryptocurrency whitepaper. Investors should also consider running a whitepaper through a plagiarism checker like this one to see if the text was copied from elsewhere on the internet.  

Assess Project Feasibility 

As we learned above, many cryptocurrencies are meant to fund some kind of project, like a peer-to-peer lending platform. 

And many cryptocurrency scams have purported to raise money for projects which are fundamentally unrealistic - like, in Bitconnect’s case, a lending platform which pays 1% interest every day. 

Thus, another way to spot cryptocurrency scams is to research the project they’re raising money for, and ask yourself, could this actually work? 

If the company already has a partially-operational project and is simply holding an ICO to raise additional funds for it, that’s a good sign. But if it’s a pie-in-the-sky project, which seems to be in its very beginning stages, take caution. 

But if you’re really looking to minimize your risk while investing in cryptocurrencies, consider following the recommendations of a tech-investing expert with a proven track record of cryptocurrency gains. 

Jason Stutman is one such expert — and his Technology and Opportunity subscribers recently banked a 132% gain on a cryptocurrency called Ethereum. Click here to learn more. 

Until next time,

Monica Savaglia

Samuel Taube

Samuel Taube brings years of experience researching ETFs, cryptocurrencies, muni bonds, value stocks, and more to Wealth Daily. He has been writing for investment newsletters since 2013 and has penned articles accurately predicting financial market reactions to Brexit, the election of Donald Trump, and more. Samuel holds a degree in economics from the University of Maryland, and his investment approach focuses on finding undervalued assets at every point in the business cycle and then reaping big returns when they recover. To learn more about Samuel, click here.

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