A look at the five biggest cryptocurrency scams to date

Following the Pincoin/iFan ICO scams in Vietnam, we take a look at the five biggest cryptocurrency scams to date.

Cryptocurrencies have revolutionized the way the world views transactions – but they’ve also enabled some monumental scams over the past nine years.

The success of Bitcoin and a number of altcoins has sparked an industry that uses blockchain technology in many innovative ways .

While the brightest minds have created some companies backed by the power of blockchain and cryptocurrencies, nefarious minds have also jumped on the bandwagon, fleecing unwitting investors in elaborate scams.

ICO fever causes massive scams

Since Bitcoin was invented in 2009, people have become increasingly excited about the idea of ​​blockchain technology. Over time, developers and business people began to develop their own solutions using this decentralized ledger technology.

This led to the development of Ethereum and other virtual currencies, with the former being partly responsible for the boom in initial coin offerings (ICO) in 2017

Since an ICO is essentially a public funding round typically launched by a technology startup that sells internal cryptocurrency tokens to potential investors, these investors purchase the tokens in the hopes that the company will buy its product brings to market and the tokens later increase in value.

An ICO is a type of “ initial public offering ” in which a traditional company makes its share available to the public for purchase. This is where the name ICO comes from .

Because there are no assurances that an ICO will deliver on its future plans, investors are taking a leap of faith when parting with their money. Of course, this has led to a plethora of ICO scams, with thousands of investors being defrauded of their money.

Here are five of the biggest ICO scams in history.

Pincoin and iFan

The most recent major ICO scam made headlines in April . Two ICOs operated by the same company in Vietnam are said to have defrauded around 32,000 investors out of a total of $660 million.

The company in question, Modern Tech, packed up its offices in Ho Chi Minh City last month and made off with investors’ money. The scam is considered the largest in the history of ICOs.

A number of investors protested outside vacant offices in the city on April 8 after the company refused to process cash withdrawals. The city administration has ordered the police to investigate the fraud.

Both ICOs have been classified as multi-level marketing scams . iFan was promoted as a social media platform for celebrities to promote their content to fans. Meanwhile, Pincoin promised a monthly return of 40 percent on investments made. The project aimed to build an online platform that would include an advertising network, an auction and investment portal, and a peer-to-peer marketplace based on blockchain technology.


OneCoin has been the subject of a number of investigations over the past 18 months. In July 2017, it was officially classified as a pyramid scheme in India and two months later was fined €2.5 million by Italian authorities .

Cointelegraph had previously warned readers to stay away from the operation as OneCoin does not even operate a legitimate decentralized cryptocurrency. The company also has no public ledger and its Bulgarian offices were raided and servers confiscated by authorities in January , while international investigations and legal proceedings against the company continue.

Scandals in countries around the world have brought home the fact that OneCoin is truly a massive scam.

In 2016, over $30 million was seized by Chinese authorities investigating the OneCoin operation in the country.

The company claimed to be officially registered in Vietnam last year, but this was later refuted by the country’s government . More than five countries, including Thailand , Croatia , Bulgaria , Finland and Norway , have warned investors about the risks involved.


Long accused of being a pyramid scheme, Bitconnect ceased operations in January following a cease-and-desist order from two American financial regulators .

Users were able to exchange Bitcoin for Bitconnect Coin (BCC) on the Bitconnect platform, which launched in January 2017, and were promised astronomical returns on their investments.

In addition, the company ran a lending program where users could lend BCC to other users, thereby earning interest income as appropriate. Bitconnect also used a pyramid system for transfers.

The crypto community therefore showed little support when the company shut down its lending practices and trading platform.

A number of users have now filed a class action lawsuit against Bitconnect to recover $700,000 in lost funds.


This particular ICO was nipped in the bud in December 2017 after being classified as a typical profitability pyramid game. Plexcorp had promised investors over 1,300 percent returns per month before the US Securities and Exchange Commission (SEC) ordered the company to suspend operations.

The Plexcoin ICO raised over $15 million. Fortunately, all funds were frozen by the SEC and founder Dominic Lacroix was imprisoned.

Interestingly, it was the first time that the SEC intervened and held an ICO accountable through its Cyber ​​Crime Unit. Plexcoin’s offerings were classified as securities, which is why the SEC took up the case.


After being endorsed by superstar boxers like Floyd Mayweather and DJ Khaled, Centratech moved into focus for its supposed Visa and MasterCard debit card service, which would allow users to exchange cryptocurrencies for regular money.

Two of the founders have since been arrested for fraud related to the ICO, which raised around $32 million, according to Ars Technica .

The SEC highlighted the extreme lengths to which founders Sohrab “Sam” Sharma and Robert Farkas went to deceive investors.

“The SEC also alleges that to promote the ICO, Sharma and Farkas created fictitious executives with impressive biographies, posted false or misleading marketing materials on Centra’s website, and paid celebrities to promote the ICO on social media channels.”

The US regulator is seeking permanent injunctions and wants to force Sharma and Farkas to return stolen funds with interest. The team is also prohibited from serving as board members or directors and is prohibited from participating in securities issues.

Investors need to be educated

As these five scams show, some scammers go to extraordinary lengths to dupe unsuspecting investors.

This highlights the need for investors to conduct due diligence in their investment decisions.

Cointelegraph reached out to American investor and Skill Incubator founder Chris Dunn to comment on the Pincoin and iFan debacle. Dunn believes that the crypto community worldwide should take a tougher stance towards cryptocurrencies in general. If not, governments will.

“The crypto community must promote financial literacy and ethical investment practices, otherwise governments will over-regulate and stifle true innovation. The most effective way to protect investors is through education. Investors must learn how to evaluate investment opportunities, quickly identify scams and manage risks. “

Not all ICOs are the same

Unfortunately, such scams are a blight on cryptocurrencies in general. Although they operate in isolation, the fact that they ride the cryptocurrency wave tarnishes the broader community that is driving innovation in numerous areas.

This provides a point of attack for cryptocurrency skeptics, even though these scams are anything but legitimate ICOs and cryptocurrencies.

The larger public and authorities should not assume that ICOs are all the same. Undoubtedly there are criminals who want to capitalize on the hype of a new technology. But that shouldn’t diminish the reputation of the work of some of the brightest minds in the IT industry.

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