Uncle's story, Ponzi scheme, Give Away and more: eight more used scams to leave your crypto wallet at zero

The crypto world recently fell prey to a new scam, based on the South Korean series The Squid Game. Taking advantage of the popularity of the Netflix product, a group of scammers launched a new cryptocurrency that, after reaching an incredible price, fell to zero.

Squid Game (SQUID) was introduced as a video game to earn virtual currency and was worth $2,860 in a few hours. With the same speed, those scammers abandoned the Twitter and Telegram accounts, took the website offline, and made off with $3.4 million.

At risk

"The high volatility of the best-known crypto assets reacts only to a post by someone with influence in finance. In fact, crypto assets have been created from a meme," Silvia tells iProUP Iglesias, from the ITSB studio, alluding to DogeCoin and the role of Elon Musk altering its valuation through Twitter.

According to the expert, before buying "it is important to see the support that each of these products has. For the majority it is trust: Bitcoin has the highest level because it has a limited issue, it rewards those who process the operations (miners) and is even being tested for the payment of goods or services".

Beyond the known currencies, Norberto Saraceni, partner at the Baker Tilly consultancy, remarks to iProUP that "there is no guarantee that an encryption project in which you invest will be successful", since "competition is fierce ".

Therefore, it recommends: "To mitigate this risk, it is important to do a deep analysis of the characteristics of the project, its viability and the reputation of the people involved. In the very near future, these projects will have to show risk ratings and independent external audits.

The specialist Cristian Borghello lists to iProUP the types of fraud most used in the world of cryptocurrencies:


One of the most remembered scams was that of BitConnect, a lending platform that allowed bitcoin to be exchanged for the bitconnectcoin token. For lending their bitcoins, holders reportedly earned 1% daily interest.

In November 2017, it received a claim from the UK to prove its legitimacy and the following year was deemed a Ponzi scheme by the Texas State Securities Board, citing user profit failures and misleading statements. It closed that same year, causing a 92% drop in the bitconnect coin and losses of US$3.5 billion.

Investigate before investing, a key measure to avoid falling into a scam

It was not an isolated case. In April 2018, PlusToken appeared, a cryptocurrency created in China. It offered a wallet that allowed you to obtain bitcoins and ethers, and promised earnings of up to 30% by recommending other users to download it.

Uncle's tale, Ponzi scheme, give away and more: eight more scams used to zero your crypto wallet

In March 2019, users reported problems with the withdrawal of funds and six months later, the founders of PlusToken were arrested. According to the Chinese government, the scam exceeded $5.7 billion.

Fake cryptocurrencies

Specialist Ismael Lofeudo tells iProUP that the ICO-based scam was the first to become known and prompted the Central Bank and the Fiscal Information Unit (FIU) to issue warnings to cryptocurrencies Argentine investors about the high risks of crypto assets.

ICOs are nothing more than an initial coin offering, a valid alternative to fund new projects. But it became widespread in the form of fraud: new crypto assets arrived with pompous names and a business model that promised high returns.

"The unsuspecting victims are encouraged to acquire a new cryptocurrency using money or crypto assets that do have market value, such as Bitcoin, Ether, DAI or USDT," explains the expert. Later, Lofeudo continues, "the project disappears and they keep the investor funds. This methodology has been repeated over and over again since 2014."

And he adds: "Although in some cases the fraud was so great that those responsible ended up in detention or with an international arrest warrant, in most cases the culprits were not prosecuted. "In addition, these frauds usually go unpunished because the victims are defrauded for low amounts and do not report them out of shame or disbelief in the judicial system," he highlights.

Cryptocurrency theft

According to Lofeudo, another modality is that someone who managed the assets (such as an exchange) loses or steals them. "Whoever has custody closes the business and keeps the clients' money," he completes her.

The first and largest case in history is that of the Japanese exchange MtGox. "On February 24, 2014, he declared that he had been the victim of a robbery for years and 850,000 Bitcoins were stolen from the accounts, leaving victims around the world. At today's value, we are talking about US$51,850 million," he says.

"Many victims are still demanding the restitution of the funds and only a few have been able to recover them," says Lofeudo, who points out that, at the local level, there are also many cases of people who offer financial services and promise high returns by managing crypto assets.

Recently, the financier from La Plata Pablo Roberto Kobylañsly, known as Ozono on Twitter, acknowledged having lost the money that his investors had entrusted to him. He has not yet refunded the money to his 60 clients, who resigned $73,000. He was identified by the CBU from the account where the investors had to deposit the money.

Theft from the gullible

Another form of ICO theft occurs when scammers take advantage of the lack of technical knowledge of the victims to steal assets that the latter have in their wallets.

A few months ago, an Argentine was defrauded with this modality for US$100,000. The scammer made him install a new wallet and after asking for his cell phone to transfer the funds, he would have copied the security words that allow the account to be registered on another device.

After transferring the money, he simply terminated the transaction, entered the seed phrase into his application, gained control of the funds, and was left with $100,000 USDT.

Saraceni stated that "cryptocurrency exchanges are more prone to being hacked than stock exchanges and becoming targets of other criminal activities. These security breaches have caused considerable losses for investors."

Criminals also install malicious software on a victim's PC without their consent to mine cryptocurrency

According to the expert, "Safely storing virtual currency is, for now, more difficult than safeguarding stocks or bonds. Exchanges make it easy to buy and selling cryptocurrency, but many people don't like to keep their digital assets on these platforms due to the risk of cyber attacks and theft."

“Some prefer offline, 'cold storage' options like hardware wallets, but it comes with its own challenges. The biggest risk is losing the private key – without it it's impossible to access cryptocurrencies,” he says.

More scams

With the spread of cryptocurrencies, ransomware attacks were also more frequent, in which a virus infiltrates an organization's servers, encrypts the information making it unreadable and requests a "ransom" in digital currency to restore the data or prevent it from being made public.

Another modality consists of fraud by triangulation, which according to Lofeudo consists of:

"In this maneuver, intermediaries or directly 'mules' are used who, for a commission, lend their accounts to carry out the operations. The fraudster leaves no trace and in many cases manages to get away with it due to the complexity of the investigation of this type of fraud," he warns.

Mining Trojans

Lofeudo indicates that "another modality that has unique characteristics is the use of programs called Trojans to mine cryptocurrencies without the authorization of the computer owners."

"The criminal installs an application on the victim's PC without the victim's knowledge. They can use a program that offers a legitimate service or exploit vulnerabilities in other software or in the outdated operating system itself," he says.

According to the expert, "once the computer is infected, it is added to a computer network controlled by the criminal and used to mine cryptocurrencies, using the computing power of the infected terminals."

As examples of this type of fraud, Lofeudo mentions programs marketed through the Steam video game platform and the hacking of the Wi-Fi network of several Starbucks stores in Buenos Aires.

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"While everything indicates that cryptocurrencies are here to stay, there are security breaches that have caused considerable losses for investors", concludes Saraceni.

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