The 7 Highest Profile Crypto Scams and Theft Cases of 2021

crypto thefts crypto scams
  • Last year thousands of people and crypto companies were victims of theft and scams. A Chainalysis study determined the amount of these crimes committed around the world at $ 7.7 billion.

Hacks and scams represent the largest cryptocurrency cybercrimes committed during the year of 2021. According to research firm Chainalysis, the amount stolen or scammed from users by crypto criminals this year rose to a staggering $7.7 billion around the world.

A preview of the 2022 Crypto Crime Report from the global data and research company highlights that cryptocurrency crime is on the rise again. Compared to 2020, theft and scams increased by 81%. 

Efforts by companies in the crypto industry to protect their users from theft and scams have thus far proven insufficient. Criminals and hackers have consistently taken advantage of platform security loopholes and flaws in order to seize digital assets. Lack of caution and ambition are two other factors that have led to this.

The exponential growth in the price of cryptocurrency assets has led organized crime to refine their methods. As a result there are currently a myriad ways for such bad actors to get hold of someone else’s crypto assets.

From direct hacks of crypto platforms and wallets, to the infamous Ponzi-type pyramid schemes and so-called “rug pulls” in which the developer simply walks away with the funds raised from their “DeFi project.” All this is without ruling out the complicity of a company’s own employees in these crimes.

Chainalysis, which provides cyber security services to government agencies, crypto exchanges, financial institutions and insurance companies alike, highlights that fraudulent investments have in fact been reduced from $ 10.7 million down to $ 4.1 million. 

Read below about the 7 most infamous crypto scams and theft cases of 2021, in ascending order of the amounts stolen.

7. AirBit Club

One of the most talked about cases in Latin America was about “investment systems” involving fraudulent cryptocurrencies. It wasn’t until after the criminals were caught in August this year that it was truly understood how the scam operated.

Using highly persuasive videos uploaded to YouTube, the criminal organization, founded in 2015, managed to build a broad customer base for its business. Initially, it was presented as a platform for trading cryptocurrencies, partner clubs, and marketing networks.

With some regularity, executives asked company partners to make small investments of $1,000, promising future membership. As they paid out hefty profits to investors, enthusiasm for the project rose, but sadly the project ended abruptly with a rug pull.

After several complaints, the police captured the leaders of the gang. Among them were Guatemalan Pablo Renato Rodríguez and Brazilian Gutemberg Dos Santos. Both were accused of committing fraud worth $20 million against the innocent investors who lost all their money. Now both are paying for their crimes in a U.S. jail.

6. DeFi100

DeFi100, a cryptocurrency project from India, scammed users out of 233 million rupees (about $ 32 million in USD), according to police reports. However, the project’s managers vehemently denied all reports circulating around social media.

Despite “clarifications” made by the project’s managers, concerns about the alleged robbery, committed at the end of May, persisted. Reports later showed that the creators of DeFi100 had instigated a rug pull and fled with their user’s funds, with the following message appearing on the company’s website:

“We scammed you guys, and you can’t do anything about it.”

DeFi100 explained that its website had been hacked and alleged that the message was posted said hackers. At the time of the incident, the Indian cryptocurrency was not well known in the country. Speculation around the robbery arose from a tweet by crypto influencer Mr. Whale who alerted users about the crime.

More detailed information about the DeFi100 scam was circulated shortly after the United States FBI reported having received 1 million complaints about online scams and investor fraud in the industry over the past 14 months.

The United States Securities and Exchange Commission (SEC) has also warned of cryptocurrency scam and thefts, publishing a manual that informed users about the crypto space and warning them about such crimes.

5. Uranium Finance

Automated market creation platform, Uranium Finance, which operates on Binance Smart Chain, reported the theft of about $50 million of its cryptocurrency deposits at the end of April through its Twitter account .

The company immediately asked users to stop making transfers to Binance while it worked on a fix to the problem. As reported, the target of the exploit was the v2.1 token migration event scheduled by Uranium themselves.

A later investigation indicated that the hacker had taken advantage of detected bugs in the platform’s balance modifier logic. The balance of the project was then inflated by a factor of 100.

Likewise, reports revealed that hackers took advantage of a security flaw to steal the project’s money. At the time, the contract created by the hacker consisted of $38 million in Binance Coin (BNB) and Binance USD (BUSD).

Among the other funds stolen were 80 BTC, 1,800 Ether, 26,500 DOT, 5.7 million USDT and 638,000 ADA, in addition to 112,000 u92, the project’s own token. The funds were moved in blocks of 100 ETH.

As shown by BscScan, the attacker exchanged the ADA and DOT tokens for ETH. This resulted in an increase in the volume of Ether to around 2,400 ETH. The thief then managed to move 2,400 ETH, which was equivalent to $ 5.7 million USD at the time, doing so through the Ethereum Tornado Cash privacy tool.

4. AnubisDAO

AnubisDAO represented the second biggest rug pull case of the year. The scam that involved around 13,200 ETH tokens, cost users an estimated $52 million, at the current exchange rate of the cryptocurrency.

The removal of some 13,200 ETH tokens also caused quite a stir among the crypto community due to the sheer amount and value therein. In the wake of the scam, disappointed members of the Reddit community raised valid concerns about the vulnerability of protocols.

The cryptocurrency, based on the Egyptian god of the dead who is often depicted with a dog-like Jackal head, was an OlympusDAO fork, which in turn is inspired by Shiba Inu. The launch of the crypto asset ended on October 29th, managing to raise 13,260 in Wrapped Ethereum.

As is well known, Copper is Alchemist’s liquidity start-up protocol which facilitates collective financing for such a project. AnubisDAO transferred the raised funds to a different address than the liquidity start-up protocol.

Hopeless investors were surprised and saddened at having been scammed. Dog tokens have gained a lot of ground in the crypto universe of late, with new assets such as Shiba Inu and Floki Inu taking the reins.

Naturally, the rise of such “memecoins” proved alluring for scammers hoping to catch unwary traders who are easily drawn in by hype.

3. Finiko: the Russian Ponzi scheme

Russian company Finiko, run by Instagram influencer Kirill Doronin operated from between 2019 to July this year like a classic Ponzi scheme. When investors awoke to discover that their accounts were blocked and they could not withdraw funds, the project’s fraudulent business came to light.

Finiko, encouraged hundreds if not thousands of Russian investors to invest in cryptos such as Bitcoin and Tether. Doing what all fraudulent companies do, the project promised high monthly returns of up to 30% before eventually pulling the rug and exiting with the invested funds.

Once enough enthusiastic users were convinced by the good deal, Finiko launched its own crypto that was listed on various exchanges. The company took advantage of the economic crisis caused by the pandemic to attract desperate clients in search of lucrative business.

While still active, the DeFi venture received just over $ 1.5 billion in Bitcoin. Approximately 800,000 separate deposits were made by thousands of users who fell victim to the Ponzi scheme.

It is not known precisely how many people were scammed by Finiko Because a portion of the money raised was used to pay the first “investments” of users in Russia and Ukraine.

2. Thodex

This particular rug pull, which took place within Thodex, was not a compromise of the integrity of the DeFi company itself, but rather of the CEO and founder, Faruk Fatih Özer. The 27-year-old Turkish crypto exchange executive disappeared after withdrawing over $2 billion worth of cryptocurrencies from the project. 

Typically, as has been shown above, when a rug pull is carried out, it is usually the fraudulent company in its entirety which works to convince unsuspecting investors to deposit their funds with the express intention of spiriting those funds away.

The case Thodex is among an estimated 90% of all robberies committed during 2021 to be of the rug pull variety, but remains unique in that the project itself was hoodwinked by its CEO. 390,000 users were defrauded by Özer who is believed to have fled to neighboring Albania where he is still being hunted by Interpol

During their investigations, Turkish police arrested 62 people suspected of having connections to Özer. The prosecution also issued 78 arrest warrants against other suspected persons with potential links to the case.

This represents the largest fraud ever committed in Turkey’s history, according to the police. The authorities managed to confiscate documents as well as other incriminating digital evidence during raids in eight provinces of the country.

1. Poly Network

The spectacular robbery of the Poly Network caused all manner of speculation. And that’s for good reason, to date, the Poly Network hack remains the largest cryptocurrency theft in history, with more than $600 million being stolen in bitcoin and other tokens. But what followed the hack is perhaps the most hilarious part of this story that has since generated uproarious laughter and comment, though perhaps not for those initially affected. 

The company revealed that the hacker had taken about $267 million in Ether, $252 million in Binance tokens, and about $85 million in USDC coins, urging various crypto platforms to block deposits of the coins. 

In a statement posted on Twitter, the Poly Network implored the thief to return the stolen assets. In return, it offered them a bounty of $500,000 and even a prominent job to help improve their security systems. 

In an AMA later held by the hacker themselves, he commented that he just wanted to show how vulnerable the platform’s security was, and that the entire episode was orchestrated for fun. A few days later, he ended up returning the stolen cryptocurrency, first in small quantities and then in larger portions until the full sum was returned. 

Millions of dollars across the various tokens stolen were transferred to separate wallets. The case went on for several days, amid taunts, tweets and veritable outrage from users, until the peculiar hacker returned all the money. 

Thus concludes the 7 most infamous crypto scams and theft cases of 2021. Remember dear reader, to always pay close attention to your investment interests so that you never fall victim to such crimes as those described above. The underworld does not rest and will continue to lurk in the shadows, waiting to capture unwary traders.

On The Flipside

  • Two things are clear from these huge instances of theft and scams in the crypto industry; there are undeniable vulnerabilities across crypto exchange’s security systems, and a lack of caution and due diligence by investors when investing their money into a project.

Why You Should Care

  • These are, then, the 7 Cases of Thefts and Scams with Cryptocurrencies of 2021 most notorious. So, you have to pay close attention not to fall victim to the crimes described above in the future. The underworld does not rest and will continue to lurk to trap unwary souls.

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    This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

    Author

    Santiago is a Venezuelan blockchain reporter specializing in economic and financial issues, with special emphasis on stablecoin trading as well as political and regulatory issues related to Latin America. Every day he reviews and analyzes movements in the crypto market to offer readers first-hand information that can help them make sound decisions in the exciting world of crypto.