According to a report by crypto spy company ciphertrace, just counting the amount of money lost through virtual currency investments in the first two quarters of 2020, this can be considered a record year for the total amount of dollars lost. "Evaporating" in the cryptocurrency market - cryptocurrency.
In the second quarter of 2020, hackers stole more than 124 million usdt from cryptocurrency exchanges, bringing the total amount stolen on exchanges to 227 million usdt. Besides, scams, appropriation of investment capital from fundraising projects, and scams caused by unscrupulous exchanges (stealing approximately 4.26 billion usdt from investors) ) is the reason contributing to this record number.
Let's take a look at some of the scams that shook the world so far in 2020 with Primexbt!
1. The founder of the plus token crypto wallet "disappeared" with the amount of 2.9 billion usdt
According to a report from ciphertrace, about 2.4 - 3 million users have been affected by this scam.
Plus token was launched in 2018 as a decentralized cryptocurrency wallet. The identity of the plus token co-founders is known only under the name of a russian - "leo" and a korean - "kim jung un", and no other information is available. The company claims that the plus cryptocurrency is based on the ethereum blockchain technology and is developed by the core programming team of a major technology company based in seoul, south korea. However, it was actually developed by a group of chinese people in jiaxing city, zhejiang province.
Token scam
At that time, despite the fact that the legal information of plus token was very "poor" and unclear, the majority of virtual currency investors were still trapped by high returns (10%-30%/month) and attractive commission rates from this company's new member attraction program.
On june 27, users reported that they were unable to withdraw funds from their e-wallets. On the same day, chinese police arrested six suspects in connection with the above scam, but the main leaders are the founders who are still hiding out of the law.
6 People involved in the token scam
image of 6 suspects arrested by chinese police because of suspects in plus token scam
2. The “mysterious” death of the founder of quadrigacx exchange buried with 200 million usdt
unlike plus token, quadrigacx is the largest cryptocurrency exchange in canada.
In december 2018, gerald cotton, the founder of cryptocurrency exchange quadrigacx, traveled with his wife to india, and was later pronounced dead of irritable bowel syndrome. However, he is the only one who holds the password and key that stores all of the exchange's assets. The crypto community was shocked when it was announced that their e-accounts were supposed to be permanently locked due to the death of the founder.
Exchange quadrigacx
However, is it that simple? Ernst & young (ey), one of the 4 largest auditing firms in the world, is the supervisory party in the insolvency case of quadrigacx has concluded that this is an asset appropriation scam. Invest.
These are the things that investors miss! In terms of infrastructure, quadrigacx has almost none. Regarding the company accounting records, all activities of the administrator are not recorded as directed by gerald cotton. There is absolutely no separation of duties and internal controls, nor is there any separation between quadrigacx funds and client funds. In addition, ernst & young also investigated that cotton had been using client funds for margin trading on competitor exchanges for many years.
3. Ctfc against control-finance ltd organization worth 147 million usdt . Bitcoin
from may 1, 2017 to october 31, 2017, benjamin reynolds created a ponzi scheme (pyramid) crypto scam project called: control-finance affiliate program (the control-finance affiliate program).
Ponzi scam model
the image depicts the ponzi pattern (pyramid)
Still following the classic pyramid scheme, control-finance entices customers with an unrealistic promise of virtual currency investment returns: customers will earn 1.5% daily bitcoin trading profit. , And interest up to 45% per month. In particular, it is an extremely attractive commission that reminds us of multi-level models. The amount of commission you receive will increase according to your current rank position (there are 5 levels from: beginner to master+) and the number of people you attract. In case you want to withdraw money from the wallet, control-finance will send a part of btc of the new customer to the old customer, and say that it is the actual profit from the investment of the virtual currency.
In addition, the company is so sophisticated that it provides its clients with fake weekly trading reports, fake account balances, and unrealistic profit figures. And finally, on september 10, 2017, reynolds was "running away" with a huge amount of money from investors. Then he switched to btc money laundering through coinpayments e-wallet.
Ctfc against fraudulent organization
However, in the end, the crime was also exposed to the law. On june 18, 2020, the us commodity futures trading commission announced the initiation of civil enforcement action against control-finance for misappropriating at least 22858.822 btc worth 147 million usdt from 1000 customers.
4. Binance exchange hacked more than 40 million usdt
in may 2020, hackers hacked and stole 7047 btc (worth 40 million usdt at that time) from the world's largest virtual currency exchange binance (by trading volume). According to ciphertrace researchers, hackers used a multi-pronged attack to steal api scripts, two-factor authentication codes, and other personal information from multiple user accounts.
Binance exchange scam
Binance ceo - zhao changpeng later stated that no customer funds will be taken to cover the loss. The company will refund users the stolen cryptocurrency through the secure asset fund for users (safu). This fund was created by binance in 2018, used to accumulate 10% of all transaction fees in a separate cold wallet.
See more: What is web programming? tutorial at primexbt
5. From 10 million usdt to 0 usdt in 10 days: fairwin ghost project
most recently on october 1, there was another case of fraud following the "old as the earth" model - ponzi made everyone in the virtual currency world utter surprise. The fairwin ethereum smart contract in just 10 days dropped from more than 10 million usdt to 0usdt.
Fairwin scam site
fairwin.me website image at the moment
10 Million usdt is by no means the largest amount stolen in the crypto world. So, what makes this scam one of the “tricks of the century”?
That is the amazing speed of development of the fairwin project, contrary to its "extremely short life". Within just 1 day (september 26), this project received an investment of 49,518 eth. Meanwhile, on september 21, its value peaked at over 10 million usdt. But, according to statistical data from etherscan, this number bottomed out at 0usdt 10 days later.
Statistical data from etherscan about the fairwin scam
data collected from etherscan shows eth wallet balance on september 30 at 0usdt
Is the ponzi fairwin project owner the one who drained the eth smart contract and disappeared? This is still a doubt. However, based on the countless withdrawal addresses stored on etherscan, one theory is that this is the action of the investors themselves.
Prior to this incident, it was not without warning surrounding the fairwin ethereum smart contract story. On september 27, philippe castonguay – a famous blockchain developer thoroughly analyzed the ethereum ponzi scheme that was growing at a breakneck speed at that time, and came to the conclusion:
“the fairwin ponzi scheme is full of vulnerabilities that put your investment at risk. So please share this information (especially in asia market), users need to withdraw money and stop using this contract as soon as possible.”
Castonguay also pointed to the three biggest vulnerabilities he found. Firstly, the contract allows the owner/admin to drain the funds in the contract. Second, the administrator has the power to permanently block the user from withdrawing funds from the contract. Third, anyone, not just the contract holder, can steal the deposit.
So, what is the magic that makes investors still plunge into ponzi projects despite knowing its potential risks? Nothing else, that is the magic of money. With the promise of a return rate of 0.5% - 1% within just 5 days with an initial capital of 1 - 15 eths, investors still despite all pouring money into fairwin smart contracts, despite shelf advice from experts in the market.
The 5 scams mentioned above are the biggest and most shocking cases from the beginning of 2020 up to now. In addition, many cases of hackers attacking virtual currency exchanges, and scams from projects calling for investment capital and poor quality exchanges, also cause significant damage.
Although the total loss of usdt recorded is very high, we must also note that this is the time when the cryptocurrency price has just recovered from the crypto winter (throughout 2018 - the first months of 2020). Up to now, the market has recovered and is not too affected by the above scams. However, investors must always remain vigilant, as none of us want to fall victim to one of these scams.
Choosing a reputable exchange is also one of the ways to limit the risk of being scammed, but even reputable exchanges are still at risk of being attacked by hackers. So how to protect yourself from the hands of hackers? Let's read it in the next article on Primexbt forum!
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