While the cryptocurrency frenzy has led to the launch of new coins, scamsters have used this frenzy as an opportunity to trap ignorant investors. A report by blockchain firm, Chainalysis, suggests scammers stole around $7.7 billion from investors through various scams and rug pulls this year. From Squid Game scam to stolen bored ape NFT scam, here’s a list of some of the biggest crypto scams of 2021.
2021 was a year of highs and lows for the cryptocurrency market with substantial gains and huge losses. The cryptocurrency frenzy also led to the launch of new coins and tokens every other day, giving scamsters the opportunity to trap ignorant investors who spent little time researching these new cryptos due to fear of missing out (FOMO).
A report by blockchain firm, Chainalysis, suggests scammers stole around $7.7 billion from investors through various scams and rug pulls this year. The report said crypto scams rose by over 80 percent in 2021 as compared to 2020. While there were many run-of-the-mill scams where scammers used phishing and email scams, some cons caught the world’s attention. Here’s a list of some of the biggest crypto scams of 2021.
Biggest crypto scams of 2021
Social media influencers were among the more prominent proponents of cryptocurrencies in 2021. Many of these influencers used platform and popularity to knowingly or unknowingly promote pump and dump schemes. In this scheme, proponents typically artificially inflate the price of crypto through false advertising and relentless promotion to sell their coins and pocket the profits while investors watch their money going down the drain.
One scam that completely embodied this ideology was what happened with savethekids token. In June, an e-sports team FaZe clan’s members started promoting a charity-based cryptocurrency called SaveTheKids. The members of FaZe clan went all guns blazing for the promotion of this token with official promotional videos and even their image on the SaveTheKids official website.
Shortly after the token officially launched, the initial investors who held the majority of the token sold their tokens, and the crypto soon tanked.
Some sharp-eyed sleuths on the internet started noticing a pattern where FaZe clan would promote crypto, and it would tank immediately after launch. After investigations, the FaZe clan suspended many of its members.
One of the most popular television shows also spawned one of the most enormous rug pull scams of 2021. The popular South Korean show, Squid Game, gave rise to an altcoin that had investors salivating. Even legacy media fell for it as the coin went from a few dollars to $3,000 in a matter of a few weeks.
But of course, it was another rug pull. A rug pull is a malicious manoeuvre in the cryptocurrency industry where crypto developers abandon a project and escape with the funds they received initially.
Although the scam was very well-planned, there were tell-tale signs of a scam from the beginning. For one, no official creators of the show were involved with the cryptocurrency in any capacity at all.
And the initial investors who bought the coin started complaining that they could not sell the tokens.
Poly Network Hack
A lesser-known name in the world of crypto, Poly Network is decentralised finance (DeFi) platform that saw one of the biggest hacks of the year. A hacker spotted a flaw in the DeFi platform that let him transfer $600 million from the network to his account.
But the good news was that the hacker was a ‘white hat hacker’, a hacker who exposes vulnerabilities in a network to help the platform tighten its security.
In a few weeks, the hacker returned the complete sum of money and even got rewarded $500,000 by the poly network for exposing the vulnerability.
Two brothers who ran a currency exchange service firm called Afriscrypt in South Africa stole bitcoins worth billions from their investors and vanished.
In April, the Cajee brothers initially claimed that their firm was hacked, and the money was stolen from their client’s accounts. But the story did not stand under scrutiny, and eventually, investors realised that the brothers were lying.
The victims’ lawyers estimated that about $3.6 billion was stolen in bitcoins. The whereabouts of the brothers are still unknown.
Stolen Bored Ape NFTs
Calvin Beccera, the owner of the famous ‘Bored Ape Yacht Club’ non-fungible tokens (NFTs), a series of digitally created art portraying apes, was scammed into giving the ape NFTs.
The scammer tricked Beccera under the guise of providing technical support for his NFTs. The scammer stole three ape NFTs, and it is estimated that each of them was worth $225,000. But Beccera claimed the three apes were together worth $1 million.
But if you stay vigilant and aware of what scams are, and how to recognize them, you’ll surely keep yourself safe when investing in NFTs.
If you are interested in learning more about NFT License Agreements or require legal assistance in connection with preparing your customized NFT license agreement, feel free to reach out to us and our expert attorneys will contact you in no time!
Note that the information mentioned in this article is not a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice and the knowledge of an experienced attorney.