Crypto crime didn’t start yesterday — but the scale of theft is staggering: Chainalysis estimates more than $54 billion was stolen on-chain in 2024 alone. From classic Ponzi schemes to sophisticated social-engineering hacks and algorithmic failures!
OneCoin, run by Ruja Ignatova between 2014–2017, masqueraded as a Bitcoin rival while operating as a sprawling MLM Ponzi. Investors bought educational packages and were encouraged to recruit others. No legitimate blockchain or public market ever backed the token; withdrawals were blocked when the internal exchange collapsed. Ignatova vanished in 2017; others involved were arrested and convicted.
Once a top centralized exchange, FTX imploded in late 2022 after revelations that sister firm Alameda relied heavily on FTX’s token to cover liabilities. A run of withdrawals drained liquidity, the company filed bankruptcy, and founder Sam Bankman-Fried was arrested, convicted of fraud and later sentenced to prison — a shock that reverberated through exchanges and lenders across the industry.
The Malone Lam case shows how social engineering can beat even sophisticated security. Three attackers impersonated support staff, coaxed a victim into sharing access and stole over $230 million. Their downfall came from flaunting the proceeds online — a trail of photos and videos that led investigators to freeze assets and make arrests in 2024.
BitConnect combined multi-level marketing with guaranteed trading returns to lure investors in. Its token soared on hype, but the system was simply paying old investors with new deposits. Regulatory pressure and shutdowns in 2018 sent BCC crashing and wiped out billions, leading to long-running legal fights and partial restitution efforts.
PlusToken posed as a rewarding wallet but was a classic pyramid. Chainalysis later tracked enormous hoards — hundreds of thousands of BTC and millions of ETH — to the scheme’s operators. Chinese authorities later prosecuted dozens; seizures and liquidations reportedly influenced crypto market prices when large caches were sold.
A 2021 token piggybacking on Netflix’s hit became a textbook rug pull: buyers couldn’t sell the token, and developers cashed out when prices exploded, vanishing with multi-million dollar gains. The incident highlighted how pop-culture hype and manipulated token mechanics can trap retail investors.
Terra’s UST and LUNA mechanism promised a dollar peg achieved by mint/burn economics. When the peg broke, mass redemptions triggered hyperinflation of LUNA and catastrophic losses across DeFi, contributing to lender failures and legal action; founder Do Kwon was later arrested amid fraud charges.
These cases show a familiar pattern: improbable promises, opaque mechanics, centralized control, or human error. For everyday investors the takeaway is plain — do your homework, diversify, prioritize custody and skepticism, and remember that where returns look effortless, risk usually hides in plain sight.
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