It feels like a week doesn’t go by without another cryptocurrency scam being uncovered. Just last week, CoinCheck, a major Japanese exchange, announced that it was the victim of an attack that saw hackers make off with $530 million in NEM (an altcoin). To put that figure in perspective, that’s more than the total amount of investor money that has been lost in every single cryptocurrency scam since 2012. And if you go back further and take into account the Mt. Gox hack, that total rises to $16 billion.
“If you can’t beat them, join them” is the motto of another tech unicorn that went on to become the biggest player in a rapidly growing industry. Rather than competing with the giants, this company found a way of profiting through partnerships with the largest players in the industry. Fast forward to 2017, and the company has not only transformed the way many industries do business, but has also become the largest player in the crypto industry, with a market cap of over $500 billions, and a valuation of over $1 trillion.
In this article, we present the findings of the Xangle report that investors have lost more than $16 billion in 136 crypto deals since 2012.
Cryptocurrencies are an exciting asset class that has seen phenomenal growth over the past 12 years. The market itself has grown from $0 to $1.4 billion so far. This growth has attracted investors of all sizes, from retailers to large corporations. Big companies like Tesla and America’s oldest bank, Bank of New York Mellon, have recently invested billions of dollars in bitcoin, and it looks like other big companies will follow in the near future.
Unfortunately, it also attracts thousands of bad actors who use cryptocurrencies as a tool to scam investors and steal their capital. Investors’ lack of knowledge about cryptocurrencies is one of the main reasons why they find it easier to convince people to invest in their fraudulent systems. Criminals are exploiting the hype around the lack of regulatory infrastructure to exploit investors.
Despite the accelerated growth of the cryptocurrency market, scammers have tarnished the reputation of the market by luring investors with promises of quick and large profits, and then disappearing overnight with the invested capital.
But what damage did the fraudsters do to investors? What are the authorities doing against these crooks?
Xangle: A leading cryptocurrency disclosure company conducted an investigation into cryptocurrency investment fraud between January 1, 2012 and December 31, 2012. December 2020.
Their findings are based on press articles, press releases, legal documents and court papers.
- Since 2012, investors have lost approximately $16,149,661,014.
- That’s how much money investors have lost to 136 different scams.
- 527 people have been prosecuted for their involvement in cryptocurrency fraud.
- The cumulative sentence for those involved in the fraud is over 160 years.
- To date, there have been charges and convictions against members of 14 cryptocurrency projects.
- Of all the reports of fraud, 24 projects or organizations did not file a report, either civil or criminal.
According to research by XANGLE, $16,149,661,014.00 has been stolen from investors in 132 different scams since 2012.
The first major scam in the world of cryptocurrencies was the Bitcoin Savings and Trust scam, which began in 2012 and ended up taking investors off 146,000 bitcoins – about $97 million by the time the founder was first indicted by the U.S. Securities and Exchange Commission in 2013.
Since 2012, criminal proceedings have been initiated against 71 projects, with a total of 527 individual arrests. OneCoin, which stole about $4 billion from investors, had the highest number of arrests, with 140 people arrested for their role in the scam.
- The longer bad actors stay in the system, the more they damage the reputation of the crypto asset class and delay its mass adoption.
- Cybercriminal services should continue to monitor and prosecute cryptocurrency scams, they should also publish advice for investors to be aware of these scams.
- Cryptocurrency exchanges and media companies should work to educate investors about cryptocurrencies and the technology behind them so they can protect themselves from scammers.
- We need to create, expand and strengthen the regulatory framework for cryptocurrencies globally to prevent fraudsters from exploiting the gaps in cryptocurrencies while not hindering the growth of the field.
Information is an important factor in raising awareness among newcomers.
Read the full report here
. He is one of the very first enthusiasts of blockchain and cryptocurrency in India. After working in the field for several years, he founded IBC in 2016 to help other early adopters learn about the technology.
Before joining CBI, Hitesh founded 4 companies in the field of cyber security and IT.
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