Cryptocurrencies attract a “get rich fast” crowd, but it’s risky. Scammers have taken advantage of this, creating many problems for the crypto community. Let’s take a look at 10 of the worst crypto scams that made headlines.
The Context
The crypto world, often touted as the future of finance, has also been plagued by its fair share of scandals. In just a few months, we’ve seen two major incidents that highlight the risks involved in this volatile market.
In July 2024, WazirX, a popular Indian crypto exchange, suffered a significant hack that resulted in the loss of over $230 million. The breach involved a multi-signature wallet managed by a third-party custody company, Liminal. While the perpetrators remain unidentified, suspicions have pointed toward the infamous North Korean hacking group, Lazarus.
Around the same time, authorities in India arrested Milan Garg, the mastermind behind a massive $209 million crypto scam. Over five years, Garg and his associates lured over 100,000 people in Himachal Pradesh into investing in fraudulent crypto schemes, promising exorbitant returns.
These incidents, while seemingly unrelated, share a common theme. Investors fall victim to their greed and the seduction of quick riches by investing in things they don’t understand.
As the crypto market continues to evolve, investors must remain vigilant and conduct thorough due diligence before investing in any project.
To help you stay informed, we’ve compiled a list of the ten most notorious crypto scams from around the world. These cases serve as stark reminders of the dangers that lurk in the crypto’s dark underbelly.
10. Mining Capital Coin (Luiz Capuci Jr.)
Damage Costs: $62 million
Mining Capital Coin (MCC) was a supposed crypto investment and mining platform that promised guaranteed returns through ‘mining packages.’ At its height, it claimed to have over 65,000 investors.
MCC advertised itself as running extensive crypto mining and trading operations, offering a daily profit-sharing return of 1% to investors. It promised weekly payouts of up to $84,000 for top-tier investors and operated a pyramid scheme where ‘sponsors’ earned a 10% commission for promoting the packages.
However, MCC lacked the mining farms or trading bots it claimed to have. Instead, CEO Luiz Capuci Jr. allegedly misappropriated $62 million from investors. MCC initially promised returns in Bitcoin but later required withdrawals in Capital Coin (CPTL), which could only be traded on Bitchain, a fake platform created by Capuci. Many users faced issues redeeming their CPTL tokens.
Capuci allegedly attempted to launder the funds through foreign crypto exchanges before fleeing to Brazil. Following his indictment in 2022 for securities fraud, wire fraud, and international money laundering, the SEC froze his assets. As of April 2024, Capuci’s appeal to lift the asset freeze was denied, and the FBI Miami Field Office continues to investigate.
9. EmpiresX (Joshua David Nicholas)
Damage Costs: $100 million
EmpiresX operated a global cryptocurrency investment scam, defrauding around $100 million from investors between 2020 and 2022. Based in Florida, the platform falsely claimed to be a hedge fund offering a guaranteed 1% daily profit on invested funds.
EmpiresX advertised its use of an AI-powered trading bot and a licensed trader to boost returns. However, the U.S. Department of Justice revealed that the trading bot was fake and the trading activities led to significant losses. Instead, EmpiresX was a Ponzi scheme, using funds from new investors to pay earlier ones, while also misappropriating large amounts of money for personal use.
The platform falsely claimed registration with the SEC to gain investor trust. In 2022, Joshua David Nicholas, the ‘Head Trader,’ pleaded guilty to conspiracy to commit securities fraud and was sentenced to 51 months in prison, three years of supervised release, and ordered to pay over $3.3 million in restitution. Founders Emerson Sousa Pires and Flavio Mendes Goncalves, who fled the U.S., were charged and ordered to pay over $45 million in penalties.
In 2024, a U.S. District Court issued a consent order fining EmpiresX $64,356,794 and permanently banning it from violating CFTC regulations.
8. Forsage (Vladimir Okhotnikov)
Damage Costs: $340 million
Forsage was marketed as a decentralized finance (DeFi) platform on Ethereum, Binance, and Tron blockchains, claiming to offer transparency and security through smart contracts. It promoted itself as a lucrative investment opportunity, using a marketing matrix and business network with reward distribution.
However, in February 2023, Forsage’s founders were indicted for allegedly operating a global Ponzi and pyramid scheme, defrauding around $340 million. Analysis revealed that the smart contracts diverted new investors’ funds to earlier investors. The Department of Justice found that over 80% of investors received less ETH than they invested, with more than 50% getting nothing. Funds were also allegedly redirected to the founders’ accounts.
Founders Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov face conspiracy to commit wire fraud charges and up to 20 years in prison if convicted. The FBI and Homeland Security Investigations are still looking into the case, and the Department of Justice continues to accept Victim Impact Statements from Forsage investors.
7. HashFlare-Polybius Bank
Damage Costs: $575 million
HashFlare and Polybius Bank were allegedly fraudulent ventures run by Estonian founders Sergei Potapenko and Ivan Turõgin. Indicted in 2022, they are accused of defrauding over $575 million from thousands of international victims.
HashFlare purported to operate a large-scale crypto-mining business, selling ‘rental contracts’ for mining equipment. From 2015 to 2019, it collected over $550 million, promising returns based on mined cryptocurrency. However, the operation was reportedly a sham, with actual mining much less productive than advertised. Many investors who attempted to withdraw their funds were reportedly denied.
In 2017, Potapenko and Turõgin launched Polybius, claiming it would be a crypto bank paying dividends to investors. They raised at least $25 million, but the venture turned out to be an exit scam, never establishing a bank or repaying investors.
The founders allegedly laundered the stolen funds through shell companies, cryptocurrency wallets, mining machines, luxury cars, and real estate. They face 16 counts of wire fraud, plus additional charges of conspiracy and money laundering. If convicted, they could face up to 20 years in prison. The FBI is still investigating and seeking information from victims of these schemes.
6. BitClub Network (Matthew B Goettsche)
Damage Costs: $722 million
Well, there’s something suspiciously shady about anything that calls itself a ‘club’ when it comes to investing. Just saying.
BitClub Network operated from 2014 to 2019, promoting itself as a crypto mining and investment platform where investors could buy shares in mining pools to earn a share of mined crypto. However, the platform misappropriated at least $722 million in Bitcoin from investors, with misleading information about mining pools and earnings.
In a 2020 IRS release, operator Silviu Catalin Balaci admitted that BitClub never ran multiple mining pools and that earnings figures were manipulated to show inflated returns. BitClub also ran a pyramid scheme, rewarding users for recruiting new investors, and sold shares without SEC registration.
In December 2019, five people were charged in connection with the schemes. In 2020, Balaci, Jobadiah Sinclair Weeks, and Joseph Frank Abel pleaded guilty to wire fraud and selling unregistered securities. In 2022, investor Gordon Brad Beckstead and creator Matthew Brent Goettsche pleaded guilty to money laundering, with Beckstead also admitting to helping Goettsche avoid over $20 million in taxes. The U.S. Department of Justice continues to gather information from BitClub victims.
5. HyperFund (Sam Lee)
Damage Costs: $1.89 billion
HyperFund, also known by names like HyperCapital, HyperTech, HyperNation, and HyperVerse, was a crypto mining and investment platform that defrauded investors of around $1.89 billion between 2020 and 2022.
According to a U.S. Attorney’s Office press release, HyperFund falsely promised investors significant returns by supporting mining operations that never existed. The platform claimed investors could double or triple their money with daily returns of 0.5–1%, but it allegedly blocked withdrawals, denying access to funds.
In 2024, three people were charged in connection with the scheme. Australian founder of HyperFund, Sam Lee faces a potential five-year sentence for conspiracy to commit wire and securities fraud. Brenda Chunga of
Maryland pleaded guilty to promoting the scam, admitting to receiving $3 million for conducting online investor meetings; she also faces up to five years. Rodney Burton of Florida was also charged with promoting the scheme, and investigations by IRS-CI and HSI are ongoing, with sentencing yet to be determined.
4. BitConnect (Satish Kumbhani)
Damage Costs: $2.4 billion
BitConnect was a crypto investment platform with its own token, BitConnect Coin (BCC), reaching a $3.4 billion market cap at its peak and even achieving meme status. However, it’s now infamous as one of the largest crypto scams.
Operating from 2016 to 2018, BitConnect marketed a crypto lending program promising 40% monthly returns, claiming profits came from a proprietary trading bot and “volatility software.” In reality, it was a Ponzi scheme, paying returns to early investors with funds from newer ones, defrauding clients of about $2.4 billion.
In 2018, BitConnect shut down its lending services, blaming “bad press” and “hacker attacks.” The platform also promoted BCC as a payment method for investors, despite never registering with FinCEN as required. BCC briefly became the 8th best-performing crypto on CoinMarketCap in 2017, likely due to alleged price manipulation.
In 2022, founder Satish Kumbhani was indicted for running the global Ponzi scheme and faces charges including wire fraud, market manipulation, and money laundering. If convicted, he could face up to 70 years in prison.
3. Thodex (Faruk Fatih Özer)
Damage Costs: $2.6 billion
Thodex was a leading crypto exchange in Turkey with over 390,000 users before abruptly shutting down in 2021. At its peak, it operated in over 120 countries and averaged 177 transactions per user each month.
Prosecutors claimed Thodex initially conducted legitimate transactions to gain trust, but the platform’s true aim was to defraud customers by fabricating transaction values. In 2021, Thodex launched a promotional campaign promising 2 million Dogecoins, but soon after, users faced issues withdrawing or exchanging their funds.
Founder Faruk Fatih Özer then announced a “temporary closure” and fled Turkey with about $2 billion of investors’ funds. Chainalysis estimates the total losses at $2.6 billion. Özer and his associates were arrested in 2022, and he was sentenced to 11,196 years in prison for fraud and running a criminal group. Despite the charges, Özer denied guilt, boasting in court that he wouldn’t have acted “so amateurishly” if he were truly running a criminal operation.
2. One Coin (The Cryptoqueen)
Damage Costs: $4 billion
Starting in 2014, OneCoin operated as a fraudulent cryptocurrency sold through a global MLM scheme, scamming millions of victims out of over $4 billion before shutting down in 2017. According to U.S. Attorney Damian Williams, OneCoin’s founders enticed victims with promises of a “financial revolution,” falsely claiming they would surpass Bitcoin as the top cryptocurrency, while the crypto packages they sold were worthless.
She swore that it would be a “Bitcoin Killer”, and that nobody would ever speak of Bitcoin in the years to come.
The Department of Justice revealed that in 2015 alone, the founders issued 1.3 billion fake tokens. OneCoin falsely claimed that its token price was based on market supply and demand, but the founders manipulated the value to create a false impression of growth. The company also lied about having a dedicated blockchain, token utility, and mining operations to gain investors’ trust.
In 2017, co-founder Ruja Ignatova, dubbed the “Cryptoqueen,” was charged with fraud and money laundering but vanished, landing her on the FBI’s Top Ten Most Wanted list. Her partner, Karl Sebastian Greenwood, was arrested and sentenced to 20 years in prison. A 2024 data leak traced Ignatova’s stolen funds to Dubai.
1. FTX (Samuel Bankman-Fried)
Damage Costs: $8 Billion
Samuel Bankman-Fried, founder of FTX and Alameda Research, became infamous for orchestrating one of the biggest financial frauds in U.S. history. In 2023, it was revealed that his scheme defrauded customers of over $8 billion.
FTX, once the second-largest crypto exchange, was closely linked to Alameda, which falsely posed as a major customer. Despite assurances that customer funds were safe and separate, testimony showed Alameda had unlimited access to FTX withdrawals, siphoning $1.7 billion from customer deposits and defrauding investors of another $1.3 billion.
Bankman-Fried misled investors with falsified financial statements, hiding the misuse of funds, which were spent on private investments and political donations. He was found guilty of fraud and money laundering and was sentenced to 25 years in prison in 2024, with over $11 billion ordered in forfeiture.
Conclusion
Cryptocurrency is a digital, encrypted, and decentralized medium of exchange. Without a central authority to regulate its value, it carries inherent risks and is more susceptible to investment scams compared to traditional investments, which are subject to more regulatory oversight.
Unlike traditional bank accounts, cryptocurrency accounts are not government-insured. This means if a service holding your crypto is hacked or goes bankrupt, the Reserve Bank or the Government has no obligation to step in and help get your money back.
To simply protect yourself from Crypto scams, heed Warren Buffett’s advice: don’t invest in what you don’t understand.
If you choose to invest in cryptocurrency, be cautious of anyone promising “guaranteed returns” or “zero risk.” Watch out for red flags like celebrity endorsements or mixing investment advice with online dating.
Thank you for reading. Share this article with anyone who might benefit from these insights.
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