A Sneak Peek at the Top Crypto and NFT Scams That Scared the Crypto Transition in 2022
The year 2022 has been a contagion hazard for the cryptoverse. Sitting in the last month of the year, tens of billions of dollars in cryptocurrency and NFTs have already been looted and looted. While the value of crypto and NFTs being stolen is amazing, it’s not all about money.
By Jasmine Anand:
The value of cryptocurrencies has fallen since the beginning of this year, which has been marked by a number of high-profile bankruptcies throughout the year. Additionally, as cryptocurrency markets rumble after the FTX exchange crash, India Today’s Emerging Tech team looks back at this nascent industry throughout the year, which has been haunted by crypto winters, unscrupulous activities and shriveled investor sentiment.
Interestingly, it is pointed out that the combined market cap of all cryptos fell from around $3 trillion in November last year, to around $900 billion currently. Here it must be mentioned that the value of cryptocurrencies deteriorated throughout the year, as a result of a series of bankruptcies following the dramatic crash of Terra’s UST algorithmic stablecoin in May 2022.
So, without further ado, here are some of the boldest crypto and NFT scams and scams that have terrorized the entire crypto world.
The Implosion of Terra’s UST
The Terra network and Do Kwon, its leader, rose to prominence in the cryptocurrency world over the course of four years, all ending in a catastrophic fall from grace. The implosion of Terra’s UST algorithmic stablecoin ecosystem wiped around $60 billion out of the digital currency space, and the UST stablecoin was removed from parity with the US dollar, falling to $0.12 in early May from $1.
Later this year, a South Korean court issued an arrest warrant for the founder of Terraform Labs, which is the parent company of the crashed stablecoin TerraUSD.
Pincoin scam
Touted as one of the most promising Vietnamese cryptocurrency business models for investors, Pincoin focused on asset sharing. According to the reports, it promised an incredibly high ROI of around 312 percent, which is a big red flag because no project can promise a return on investment, let alone an ROI of that magnitude.
Backed by cryptocurrency company Modern Tech, it was built behind an Initial Coin Offering (ICO) investment program, which allowed around 32,000 people to invest nearly $660 million dollars. When they raised about 660 million dollars, the team disappeared from their office, and only social networks are live right now. Even their website stopped responding and is currently down.
Morris Coin Fraud
The ED (Enforcement Directorate) had unearthed a Morris coin scam worth Rs 1,200 crore during the raids conducted by the agency at 11 locations across the country. This scam was initiated by Nishad, a resident of Kerala.
Investors were promised to be paid 3 percent every day on a minimum investment of Rs 15000 to buy Morris Coin, a fake cryptocurrency. The accused and his partners allegedly collected deposits from investors under the guise of an Initial Coin Offer (ICO) for the launch of the Morris Coin cryptocurrency.
Agents were given around 10-15 percent commission for bringing clients. Nishad promised investors that the cryptocurrency would be listed on the Franc exchange, a fake crypto exchange based in Coimbatore, after which the value of the tokens would increase manifold. However, the coins were never listed. Several FIRs were registered by the duped investors and the prime accused was later arrested by the Kerala Police.
Baller Ape NFT Scam
US authorities have announced criminal charges against the Baller Ape Club NFT collection’s creator for involvement in the “rug pull” scam, which is nothing more than terminating the alleged investment project, deleting the website and stealing investors’ money.
According to the reports, Le Anh Traun, a Vietnamese national and his co-conspirators took down the website and fled with investors’ money after the first day public sale of Baller Ape NFTs in the Central District of California. The NFTs depicted various cartoon characters, including that of a monkey.
Traun collected close to $2.6 million from the Baller Ape NFT scam and now faces up to 40 years in prison.
FTX debacle
FTX, one of the most prominent crypto exchanges in the world, was established in the offshore financial haven of the Bahamas in May 2019. In November of this year, public reports began circulating citing leaked internal accounts and questioning the health and liquidity of both the exchange as well as its trading arm, Alameda Research.
The disgraced crypto exchange’s downfall began in earnest when Changpeng Zhao, Binance’s CEO, set off a bank run on the FTX exchange with a tweet saying his exchange would liquidate its holdings of FTX’s original FTT token.
Finally, on November 17, FTX filed for bankruptcy, leaving at least one million depositors unable to access their money. And its former chief executive, Sam Bankman-Fried, was arrested for “financial offences” against US and Bahamian laws. The charges against him included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.
It is pointed out that SBF secretly transferred $10 billion in customer funds from FTX to his trading company Alameda Research, raising suspicions among the crypto community. And a large part of the total has since disappeared. One report suggests that the missing amount is around $1.7 billion.
The bottom line
The cryptocurrency market is characterized by risk and extreme volatility. However, it is not regulated, thus allowing fraudsters to easily target the market. Therefore, investors must be careful and follow due diligence so that they are not cheated in the crypto world.
