The 5 Top Scams in Crypto History
1). The squid token
Like the Netflix series it was named after, only one person won the game. The squid token was a play-to-earn token for the squid game which was an online game launched in 2021. To play, users had to buy the token from decentralized exchanges. The platform required the ratio of buyers to sellers to be 2:1, meaning that for every 2 buyers, there has to be 1 seller. This process made buying the tokens easier than selling them. To sell the squid token, users had to buy Marbles, a crypto that is earned when playing the game.
Because of how popular the Netflix series it was named after was, the squid token pumped to over $2,000 after it launched. Although there was no official announcement of its affiliation with the series. Months later, Twitter flagged the squid token account, the website to the game went offline, and the comment sections of all its social media accounts were disabled. The developers went away with over 2 million dollars.
2). Thodex exchange scam
Thodex was a crypto exchange with over 390,000 active users when it went offline in April 2021. It was the fourth crypto exchange opened in Turkey and was licensed as a money business in 2020. In March 2021, the exchange announced that they would distribute 150 dogecoins to every new user between March and April 15th, 2021. 4 days later, the exchange announced that they were under cyber attack which explained the slow transaction execution. The following day, it suspended trading. The team stated that this was due to the ongoing partnership agreement with institutional investors and that trading restrictions would be lifted in 4-5 days. While users experienced restrictions on their funds, the founder of the exchange left Turkey with $2 billion worth of crypto.
3). The Axie Infinity hack
The Axie Infinity hack was a result of a fake job listing sent to a senior engineer of the Axie Infinity game team. After a series of interviews, a job offer was sent in the form of a PDF. This PDF was corrupted with spyware. When the engineer opened the PDF on the company’s computer, the hacker had control of four out of nine validator nodes on the Ronin blockchain. This gave them access to the Axie DAO and one more validator node. With this, the hackers transferred 173,600 ETH and USDC which was worth $25 million, this totaled over $600 million.
4). The Pincoin scam
Pincoin was launched by a Vietnamese company called Modern Tech. Its whitepaper gave no clear information on its founding team but promised investors a 48% return on investment every month. Investors who referred others were promised an 8% commission on every referral. After the first reward distribution, users were paid in iFan token which was created by the same company for celebrities. This token had little liquidity. In March 2018, the team disappeared with a total of $870 million which was the funds raised in its initial coin offering.
5). The Bitclub mining scam
The Bitclub network was built in 2014 as a company that helped investors acquire shares in Bitcoin mining pools. It also gave bonuses to users who referred others. But in December 2019, it was discovered that the company never ran the mining pools it had told the investors they were investing in and had stolen $722 million in five years.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/07/15/5-top-scams-in-crypto/