Most significant frauds in the bitcoin space

Almost every trader and investor are enjoying returns of bitcoin. Undeniably bitcoin is known for its safety and anonymity features, but people have lost their money in cryptocurrency scams. Although bitcoin has always been a better alternative to bitcoin trading, you must know about the most significant bitcoin scams happening in the bitcoin space. You should also know how bitcoin can affect businesses and trading, for example, how Dior’s Business had been affected.

Bitcoin is a growing industry, and many people follow this latest technology, but some tend to become fraudsters due to their greediness. After extensive research on these frauds, here listed are only the most significant ones to bring you some awareness of cryptocurrency frauds.

Scams that happened in the initial years of bitcoin:

The first one is the Bitcoinica scam which started in 2011. It was a Ponzi scheme that Chris Larson ran. It was a trading platform that allowed users to buy, sell and trade bitcoins instantly while they got paid to do so by funds coming in from new investors like Paypal deposits and funds received through

The second most significant bitcoin scam is Mt Gox, which has been going on from 2010 until 2013 when it abruptly shut down after losing almost half a million bitcoins belonging to customers, which amounts to over 744,000 bitcoins.

  1. Onecoin:

This scam is similar to the Bitcoinica Ponzi scheme as it also used Paypal for deposits. It, too, started in 2011 and was run by Matej Boda. There are over 8000 complaints on the Better Business Bureau related to Onecoin. The company received a lot of attention in 2017 due to the development of its One Chain blockchain. The company’s headquarters are located at a building in Split, Croatia, and have 19 other operations worldwide. They use new altcoins like One unit coin (1ucoin) to raise more funds through initial coin offerings (ICO).

  1. The Hashlets Scam:

It is one of the most talked about a scam in the bitcoin space because this started around the same time when bitcoin was rising, and it garnered a lot of investors and miners looking to capitalize on their investment in Bitcoin. In 2014, scammers introduced a cloud mining platform called GAW Miners, owned by Homero Josh Garza and ZenMiner.

The company promised a 90% return and paid in cash, bitcoin, and altcoins. WAX’s token was to buy cloud mining contracts that were valid for a year. This token was meant to pay for the cloud mining, but it was not a currency and was just an altcoin that was used as fuel for the free bitcoin mining contracts on GAW Miner’s cloud. The scammers running this scam made use of an unregulated trading platform called Pay Nakamoji, which is not even operating anymore.

  1. The BitConnect Scam:

Another BitConnect scam started in 2017 and affected investors from around the world, especially those who followed this cryptocurrency’s rise in price and popularity between 2014-2017. It is the only situation where a cryptocurrency scam has been an officially licensed and compliant financial institution. BitConnect is the brainchild of San Francisco programmer James Bailey who created it using Ethereum technology in 2016.

The company claims that interest on their platform will be through their central bank, the BitConnect Coin or BCC. It started as a Ponzi scheme where clients were expected to pay for membership using Bitconnect Coins or BCC as an investment to get discounted interest rates and make a profit on their investments.

  1. The NEO Scam:

This one is also known as the Chinese Ethereum Scam and happened between 2017-2018. NEO is another altcoin created by Da Hongfei, a self-proclaimed cypherpunk, and self-proclaimed hacker. NEO has a system in which users can use the NEO tokens to make transactions and payments on the network. This altcoin has gained a lot of popularity in China, being a payment system, exchange, cloud storage, and smart contracts platform.

  1. BitKRX:

BitKRX is nothing but the South Korean Bitcoin exchange that crashed in 2017 and only accepted deposits in BTC. The company was incorporated with no information about their names or identities and operated from a Korean name called Kim Hyon Woo. It reportedly lost about USD 4.1 million worth of bitcoin to investors who got lured by its attractive 10% monthly interest rates with 0.25% deducted from every trade commission transaction.

  1. Gatecoin Exchange:

Another scam between 2016-2017 is Gatecoin which dealt in digital trading assets, bitcoin and ethereum, to users around the world located in the cryptocurrency space industry.

  1. The Parsec Front:

It is a South African Bitcoin exchange that legitimized the usage of bitcoin by transacting over the same while taking no commission apart from a lifetime trading fee. The company operators made use of Bitcoin as a payment system. Still, they then introduced its internal token called Parsec Coin, which was backed by bitcoins and was later used in their internal exchanges.

It started in 2016 (when bitcoin’s price was going up), and during this time, it issued more than 200 million PARSEC coins in total. This altcoin was basically to pay the trading fees, and they charged a 1% spread while 30% would go to their company.

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