2018 has been a brutal disappointment in many ways for investors in the crypto industry. Despite a market downturn of over 60% through Q2, ICOs have not slowed down and money is still being invested - but not everything is a winner. Let’s look at some of the worst losses through the first half of 2018.
Prodeum is the smallest scam of 2018, allegedly only hauling in $11 USD. Not $11 million, just $11. Their whitepaper detailed plans to change how the prices of fruits and vegetables are looked up in grocery stores. After being live for only a few days their website just disappeared, leaving only a blank white page with the word "p*nis" on it. Nice.
BitConnect, by contrast, is one of the most widely known projects that duped many people. At one point, this Ponzi scheme had a market cap of over 2.6 billion dollars, putting it in the Top 20 coins at the peak of the market at the end of 2017. In January of 2018, it suddenly shut down amid growing legal pressure and government investigation. The coin value plummeted from over $400 down to just $30 in one day. The website remained open for withdrawals, though most balances were now next to worthless. Still, some deny the fact that this project was a clear Ponzi scheme and continue to trade these coins, in case of a later resurgence.
Coincheck is a Japanese exchange that was hacked for 500 million NEM tokens, which at the time was worth $530 million US dollars. They have been investigated by the government to determine how this happened, and how to pass new regulations to prevent it from happening with other exchanges.
For years, an Ukranian hacking team used Google Ads to attract users to fake sites that mirrored blockchain.info, using malicious software and deception to trick users into giving up their wallet addresses and private keys. They have stolen over $50 million in Bitcoin from people.
Mining Max was an Ethereum mining operation that raised a whopping $250 Million USD from investors. The project seemed legitimate for a couple of months and even provided users with decent returns initially. After a couple of months, it was clear to everyone that Mining Max’s business model was completely unsustainable, and the company was not designed to last long in the first place. A lot of things are still unknown about what went wrong, but it appears that out of the $250 million ICO fund, only $70 million was actually spent on the operation.
Coinrail, an exchange in South Korea, was hacked for over $40 million dollars’ worth of various cryptocurrencies. A blog post by Pundi X (one of the tokens stolen) suggested that the hacker may have stolen 1,927 Ethereum, 2.6 billion NPXS, 93 million ATX and 831 million DENT coins, as well as significant amounts of six other tokens.
Verge is a unique case, being labeled a scam (depending who you ask), and the victim of a hack. Proof of a possible scam is documented in many articles, from the privacy Verge claims to provide being technical nonsense, to the movement of over 18 million coins from a company wallet, about which the founder lied about where it was going.
Since they have little idea about how technology works, hackers decided to target their blockchain looking for holes to exploit. They did, and for three hours, mined every single block, stealing over $3 million dollars' worth of coins. The developers struggled to come up with a fix, and accidentally hard forked the whole chain. What's worse, the fix they eventually came up with did not work. The hacker continued to be able to mine all the coins. This is also not an isolated case of Verge getting hacked.
If that wasn't bad enough, Verge’s founder is also a well-documented criminal with a multi-offence history. Maybe you can give the benefit of the doubt to one or two of these circumstances, but altogether, it is too risky to lend any trust to this project, especially when there are much better projects out there to invest in.
The diehard Verge community, whose stubbornness is the sole reason this coin has not yet fallen by the wayside, continues to believe this project will eventually deliver on its promises. A look at an article about Top 10 Coins That Failed reveals nothing is too big to be a scam.
Bithumb (Hacked)
South Korean exchange Bithumb was hacked for $30 million dollars’ worth of various coins. Shortly after the attack, Bithumb announced it will refund users who were affected by the hack.
Vietnamese investors put a whopping $660 million USD into PinCoin, only to have the 7 members of the company pulling an exit scam after the ICO, never intending working on the project. They left the country with nearly $100 million dollars each.
US-I Tech did most of their damage in 2017, promising ridiculous returns for Bitcoin investment, and actually delivering on their promise long enough to fool many novice speculators. Structured like a typical pyramid scheme, they sucked in hundreds of millions of dollars, before being raided by US officials in Texas, and ceasing operations in North America.
When a coin is stolen from an exchange, it is often dumped right into the market, flooding the supply and causing the price to drop considerably. Usually the price will recover, though the time it takes depends on the size of the hack. However, when a coin is revealed to be a scam, it loses all its value, as the platforms and partnerships will never be made. Some of the larger scams in history like Bitconnect and Verge continue to be listed on exchanges, and their communities push volume around to keep the hope alive of recouping something for their investment, which of course means they may be duping new investors into taking on the rest of loss. So, Caveat emptor – let the buyer beware!
Originally published at cryptofinance24.com.