Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

BitConnect

Those participating in the 2017/18 bull market will remember Carlos Matos on stage shouting “Bitconnect”. In hindsight, it was never going to end well. And end well, it did not.

https://www.youtube.com/watch?v=xK3yuxrmCac

Bitconnect was marketed as an open-source cryptocurrency, guaranteeing high yield for investors – this should have sent alarm bells ringing, as nothing is guaranteed in financial markets.

Essentially it was a massive Ponzi scheme. The administrators closed the platform and compensated investors in the soon to be worthless BitConnect coin (BCC). What happened next was a near complete loss of value of BCC and one of the biggest exit scams in crypto history, costing investors over $3.4 billion in losses.

PinCoin

PinCoin was another project (if you can call it that) with a promising whitepaper, an ambitious roadmap, and (no surprise here) 48% returns per month guaranteed.

The stated objective for PinCoin was to “build an online collaborative consumption platform for the global community”. Sorry, whattt?

Initially PinCoin only had one token, $PIN. The first few investors were paid out in cash to prove legitimacy. Then, the scam began. A brand new coin was released called iFan. This was then advertised as a legitimate asset, after which investors began receiving their pay-outs in iFan – which wasn’t listed on any exchange and couldn’t be traded anywhere.

When investors tried to find out what was going on, they found the PinCoin office in Vietnam had been completely abandoned – the scammers had made their exit with over $650 million of investors capital.

If it sounds too good to be true, it usually is.

OneCoin

OneCoin is by far the worst on this list.

In 2015, a woman named Ruja Ignatova claimed to have invented a cryptocurrency to rival Bitcoin, a “Bitcoin killer”. This was a period where Bitcoin had gone from a few cents to hundreds of dollar per BTC, and so the hype was euphoric.

https://www.youtube.com/watch?v=638_Jpp2Rq8

She really had the audacity to go on stage at Wembley Arena in London and shill her scam to thousands of people. Investors all around the world poured billions of dollars into the OneCoin project.

OneCoin did not even have a blockchain - it was all just on paper accounting. Not at any point did anyone have a single shred of evidence that the OneCoin blockchain existed – everyone just took their word for it. For anyone who has not watched the Wembley video, it is really something.

 

In early 2016 a blockchain developer named Bjorn Bjercke was contacted by an agent who stated they were looking for someone to build them a blockchain. Bjorn was confused, since he had been told that it was a cryptocurrency company with a crypto asset – but they needed someone to build them a blockchain?

Low and behold, Ruja disappeared. The total damage to investors was over $4billion, and it’s speculated that she made off with the majority of that. To this day, no-one knows where she is.

Moral of the Story

Although the crypto market has matured a lot in the last decade, there will always be people looking to take advantage of people’s trust for their own gain. This is true for anything where value is involved, not just crypto. Identifying crypto scams is becoming more difficult as the complexity of them increases. However, the warning signals are generally:

• Over the top marketing.
• No whitepaper, or a whitepaper that promises the world without explaining exactly how they plan to execute the proposal.
• A project promising massive, consistent returns.
• If it sounds too good to be true 99% of the time it is.

At Cryptonary we always assume a token is a scam  – guilty until proven innocent. The best way to avoid ending up a victim is to stay vigilant, stay rational, and use a bit of common sense. But is common sense really that common?