Crypto scammers evolving with the new year

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  • In 2017 billions of dollars were poured into blockchain networks tanks to Initial Coin Offerings.
  • By the time 2020 rolled in and the Covid pandemic hit the world, the crypto industry took another spike in profit. The opportunity presented itself as an opportunity to lure in additional investors.
  • Thodex, a Turkish cryptocurrency exchange, executed the most significant rug pull of 2021.

Since the debut of Bitcoin in 2009, the crypto industry has steadily grown into a multi-billion dollar franchise. In just under two decades, what appeared as a hoax has transformed the tech industry by revolutionizing the core of its functionality; centralization. Through Bitcoin came Ethereum, and dozens of altcoins have steadily grown the ecosystem through sheer tenacity and promise of fortune. Thus Web3 slowly came to fruition. Unfortunately, like all good things, some seek to exploit it. Thus hackers and scammers turned to the more lucrative venture, and crypto scams became the new demerit of crypto traders, only rivalled by the crypto volatility—the need for proper crypto regulations to escalate things. 

Over the years, the crypto industry has lost billions due to the presence of crypto scammers and hackers. Blockchain security was the alternative, t unfortunately, its new nature became its undoing, and an unfinished product is susceptible to zero-day vulnerabilities.

As security measures and awareness continued to curb crypto scammers, they became innovative. Today the definition of a crypto scam has evolved into more sophisticated means. Here s a walkthrough into the minds of crypto scammers.

How crypto scams came to be

Soon after blockchain technology debuted in Bitcoin’s system, it became apparent that ordinary Web 2 scammers and hackers essentially hit a slump. Developers built blockchain security for the primary purpose of being transparent. It used an entirely new concept that promised change. Despite its success, Web2 had various flaws, and one of the critical aspects was its inability to attain integrity ultimately.

Also, Read Common cryptocurrency scams to look out for in 2022

Its centralized system left a major focal flaw. Accessing the central core of the system meant complete dominance over the entire system. Despite the numerous security measures, it still had a central failing point. Web3, on the other, advocated for complete transparency and immutability, and the crypto industry was the first iteration to adopt this trend.

Unfortunately, humanity is built with a revolutionary concept encoded in our DNA. Hackers and scammers learnt to adapt, and soon after, crypto scams and hacks became a force to reckon with. The new concept of blockchain security and the crypto industry allowed deviants to find a vulnerability and twist the truth of how crypto genuinely works.

crypto scams
Crypto scams have ravaged the crypto industry despite the cries of crypto traders.[Photo/StormGain]
Many individuals more s governments did not believe that crypto would last and as such, crypto regulations were non-existent. This further created leeway for crypto scammers, and multiple crypto traders suffered at their hands. The definition of crypto scams evolved, and its perpetrators grew smarter.

The first iteration of crypto scams; Ponzi Schemes

A Ponzi scheme is a fraudulent investment scam that promises astronomical returns with little or zero risk. These scams thrived in Web2, but once the crypto industry gained traction in 2016 and 2017, it redefined the meaning of success.

With many crypto exchange platforms uprising over the years, more and more investors turned to crypto for quick returns. In 2017 billions of dollars were poured into blockchain networks tanks to Initial Coin Offerings. This allowed new crypto exchange companies to crowdsource funds from usual outside standards, thanks to a lack of proper crypto regulations. Centra Tech was a Ponzi scam that offered investors a take within their company for cutting-edge crypto financial tools.

Also, Read Africa: The urgent need for regulations to protect crypto investors from fraud and scams.

At the time, navigating crypto volatility was relatively new to crypto traders. Thus when a company official announced it was developing tools that would assist in narrowing the gap of volatility within the crypto ecosystem, investors lined up like children in front of an ice cream truck. Unfortunately, everything surrounding the “crypto company” was fake. Its executives, business partnership, and even licensing were fake. At the end of it, all investors lost billions.

According to a Cahinalysis Crime Report, Ponzi schemes accounted for almost 92% of the total crypto scam revenue in 2019. Victims lost $3.9 billion to Ponzi schemes alone. Notice crypto scammers genuinely redefined the meaning of success.

Crypto Scams taking a turn in 2020

When the era of Ponzi scams died down and blockchain security added another page to its book, crypto scammers started taking a different turn. By the time 2020 rolled in and the Covid pandemic hit the world, the crypto industry took another spike in profit. The opportunity presented itself as an opportunity to lure in additional investors.

This was the era of investment scams where crypto scammers lured investors by presenting projects to crypto traders and requesting funding. This alteration to Ponzi schemes improved because genuine businesses began taking this turn. Mirror Trading Internation is a prime example.

The crypto exchange had a reputation over the past several years and had a new project for 2020. Naturally, crypto traders gathered around it and invested their hard earn crypto coins. In addition, MTI even lured different organizations such as Forsage, MiningCity and PGIGlobal in hopes of forming partnerships. This crypto scam was different in approach and evolved into targeting organizations. Ultimately, it stole $1.7 billion from crypto traders and the crypto industry.

Year of rug pulls

With crypto scammers growing bolder and their organizations profiting tremendously, others began following suit. The lucrative venture of crypto scams started poisoning the entire crypto industry and even poured into the NFT marketplace, creating the term “rug pull”. Yet another iteration of a Ponzi Scam that is less illegal and multiple individuals have gotten away with.

Blockchain security is unable to fully curb crypto scams due to the lack of crypto regulations[Photo/]
Under the appearance of a legitimate crypto project, crypto scammers promise massive investment returns to draw in crypto traders and investors. Unfortunately, the brains behind the project suddenly got a change of heart and drained the funds abruptly. The difference between this and the other two iterations is that the crypto scammer merely announces the project without revealing any tangible result. This type of crypto scam greatly hinges on reputation. At this point, the main culprits were the more well-known crypto-success series.

 Also, Read South Africa experiences a roll of crypto scams targeting young minds.

Due to the use of reputation, their victims may take no genuine legal actions against the individual if they play their cards right. At this point, blockchain security had significantly improved, but crypto regulations were barely complete. According to Chainalysis, rug pulls were responsible for more than $2.8 billion in revenue in 2021. The definition of success changed again; this time, ordinary individuals turned to the featured crypto scammers. 

Thodex, a Turkish cryptocurrency exchange, executed the most significant rug pull of 2021. The exchange founders disappeared with over $2 billion in client funds after the exchange halted the withdrawal ability f crypto traders. AnubishDAO did a similar thing and vanished with $58 million and Uranium Finance at $50 million. The bitter truth remained that crypto scams genuinely meant an instant payout built over years of hard work.

2022 Crypto Scams targetted data

Fortunately, by 2022, blockchain security will achieve a new revolution and crypto regulations will set the base standard for crypto traders. Unfortunately, the crypto scammers soon collaborated with crypto hackers. Malware, infected crypto wallets and zero-day attacks took centre stage, and blockchain security became the target. Crypto scammers would develop crypto tokens and launch them into a blockchain network. After promotion and value increase, they immediately pull down their tokens and transfer them to Tornado cash. This caused an uproar as some organizations allegedly aided crypto scammers in broad daylight. 

As the years progressed, crypt scammers stepped into the daylight. Gone are the days when a random individual contacted you to offer a once-in-a-lifetime opportunity. These days crypto scammers are CEOs and Blockchain developers who utilize their reputation of functionality to drain crypto trader funds.

Also, Read How to spot the difference between crypto investments and scams

The recent FTX collapse may be attributed to a crypto scam as Sam Bankman Fried has caused one of the most significant influx in the crypto industry.

Wrapping up

 Crypto scams have ravaged the crypto industry, and many crypto traders have suffered. What started as an organization to exploit and bypass blockchain security soon turned into an open venture. 2022 is drawing its final curtains, and many have wondered what is next for the crypto industry. Will it survive in crypto winter? Will crypto volatility finally be its undoing?


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Ken Mutuku
Ken Mutuku
Your Guide to the Future of Tech, Web3, and Digital Storytelling. With a keen eye for detail and a knack for concise communication, Ken Mutuku is your go-to professional for decoding the next wave of technological evolution. Whether through captivating videos, insightful articles, or engaging presentations, he masterfully crafts messages that deeply resonate with his audience, setting him apart in the digital landscape.