The entire cryptocurrency market has reached a total traded capitalization of nearly $2 trillion dollars in just 10 years. The price of a single bitcoin reached $18,737.60 by 18 December 2017, with a global FOMO frenzy, but then the price of bitcoin tanked to as low as $3,209.76 by 15 December 2018. The volatility of the cryptocurrency has not however deterred investors trying to make a quick buck and this is where the scammers take advantage of innocent victims.
Although blockchain tech is a relatively safe technology, cybercriminals manage to find breaches and loopholes to break into the websites and compromise users’ digital wallets and funds. It goes without saying that the laws protecting investors of ICO are far from perfect, so it’s easy for founders to commit serious financial crime and get away with it. The term “Wild West” is often associated with cryptocurrencies and for the most part, it is true, as global regulation is still a work in progress, with governments struggling to keep up with the pace of innovation.
People often buy cryptocurrencies using a credit card/ wire transfer or any type of method to move funds to an exchange and in some cases directly through the scam websites, and this is where the liability can be attributed to the card issuers and banks, as they are supposed to safeguard customers funds.
Investment Scams will often get you to transfer cryptocurrencies as they are anonymous it is very difficult for an untrained to track and recover their funds. Below are two of the most prolific scams in recent history:
In 2015 Ruja Ignatova, along with her brother, Konstantin Ignatov, ran “OneCoin” which claimed to be a new and better version of the cryptocurrency Bitcoin and managed to steal an incredible $5 Billion from people around the world. They held elaborate and glamorous events where they pitched OneCoin to potential investors and claimed it was going to change the world and usher in a new world of financial freedom. Those who invested early were told they would be at the start of a revolution. However, nothing actually existed, OneCoin didn’t have a blockchain, a cryptocurrency or wallet. Ruja Ignatova vanished in mid-2017 and is being charged with money laundering offenses in several countries.