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The Most Prominent Cryptocurrency Hacks and Scams You Should Know

Author: Martin Moni
Martin Moni
All publications of the author

Hackers and con artists are always looking for new ‘opportunities’ to take advantage of. Recently, the coin industry has become a prime target because it is so lucrative. As soon as the crypto industry became centre stage in 2017, there have been numerous attacks on crypto platforms and wallets as well as scams targeting individuals in the guise of making quick profits. Today, we shall look at those scams and attacks that made headlines around the world. We believe that in order to avoid falling into such a situation, the best immunization is to learn how they were done in the past. (For any trader or investor, these will be the: 10 Most Important Resources to a Coin Trader)

Largest BTC ETH and other coin attacks

One of the key selling points for coins is that they are secure and cannot be hacked. Through blockchain, a coin network automatically checks itself for authenticity, thereby eliminating a direct attack on the network itself. However, the coin platforms, individuals and companies working with the technology are still vulnerable. Hackers know this, and they have initiated several coin attacks over the years. The largest of them have managed to create a blotch on the network, such as these. (Before investing, learn these: 5 Tips to Choosing the Ideal Coin Platform?)

Mt. Gox

This is the most often quoted case among coin attacks, and it showed just how vulnerable crypto platforms could be to attacks. By 2013, Japan’s Mt. Gox was the world’s largest coin platform, holding a large portion of all BTC in circulation worldwide. In 2014, though, the platform filed for bankruptcy after the company discovered it had lost about 850,000 BTCs worth $473 million at the time based on Bitcoin price charts. These were also about 7% of the entire number of BTCs in circulation. But this was not even the beginning of Mt. Gox’s problems as there had been other attacks prior to this huge one. For example, back in June 2011, when only a few enthusiasts knew about BTC, a hacker had stolen BTC worth $8,750,000 and then used the platform’s own software to sell them. After gaining access to a computer used by an auditor of Mt. Gox, the hacker was able to change the nominal value of a single BTC to $0.01. Afterwards, they then transferred 2,000 BTCs from the company’s client accounts. (Do you know: Which Are The Most Influential Coin Markets By Country?)

Despite the setback, it did not cripple the platform as it was handling about 70% of all BTC transactions. The 2014 case was really huge, though, and there was a need to investigate further. After investigations, it was discovered that the theft had occurred over several years since 2011 with hackers siphoning BTCs bit by bit. A few of the BTCs have been recovered, and several clients refunded, but the majority of BTCs were lost permanently. Some of the recovered BTC came from Mark Kapelès himself, the owner of the company, who claimed to have found 200,000 BTCs in cold storage. A company called Always Efficient LLP has also been in the news lately as the company that helped launder the remaining 650,000 BTC. (Investing in coins: Watch these 5 profitable coins)

It is unclear how many BTC have been recovered, or whether everyone will be refunded, but the Mt. Gox debacle proved showed that platforms had to be more careful in how they protect their clients’ assets. Moreover, Kapelès admitted he had been running a bot trading program, now nicknamed Willy bot, to increase trade volume. (Are you wondering: How easy is it to trade Coin in the Forex market?)

DAO attack

When ETH had proposed the use of a Decentralized Autonomous Organization (DAO) tokens as a form of crowdfunding in April 2016, the ICO became instantly popular. The idea was very simple and would have actually been revolutionary. It was a bit like Kickstarter where ‘investors’ fund a proposed project and earn from the returns. Anyone could fund a project put forward by an individual using Ether tokens and earn some profit, also in Ether, if the project is successful. (Investors must know: What will happen to ETH in 2018?)

Of course, people were interested in the idea and coins had also began to become really popular by that time. In under 3 weeks, the ICO had raised over $150 million, making it one of the best ICOs even by today’s standard. Soon thereafter, hacker(s) found a vulnerability that enabled them to take off with $50 million worth of ether tokens. Among coin attacks, this was significant enough to even force ETH to perform a hard fork into ETH and ETH classic. Nevertheless, they were still not able to recover the stolen tokens, even though their value was diminished after the attack. (Check out this: Ripple Price Forecast, Making Money Moves!)

Bitfinex attack

Soon after the DAO attack, the second-largest attack of a crypto platform happened at Bitfinex platform. You may know it today because it is among the 10 largest platforms today all over the world. Interestingly, the attack was done on what most consider to be an improvement to security, ‘miltisig’ accounts. The word ‘multisig’ is a combination of the words ‘multiple signature’, which is similar to the 2-factor authentication used by some websites. Bitfinex had partnered with BitGo, a crypto wallet provider, to create the multisig system. Bitfinex would thus hold 2 keys while BitGo held 1 key, yet all 3 were required to verify a transfer of funds. (Keep an eye on: TRON Predictions And Forecast For 2018 And Beyond)

Regardless of the improved security system, 120,000 BTCs were drained from the platform. At the time, these were worth $72 million, but at the peak of BTC’s value on the 6th of January, they would have been worth more than $2 billion. Neither BitGo nor Bitfinex themselves took responsibility for the attack, but they devised a scheme to refund their clients. They seized 36% of all their users’ balances to create a token called BFX valued at 41 each, and urged that those who lost money should convert their BTC to BFX. Once done, the BFX tokens were available on the Bitfinex platform, where investors could buy them as they would any other token. In the end, Bitfinex did manage to refund their clients, although it was not in the most transparent way. Indeed, some crypto experts called this strategy a Ponzi scheme. (We are asking: Does BTC Stand A Chance Of Becoming The Worldwide currency?)

Parity Technologies attack

In July 2017, hackers found a bug in wallets provided by Parity Technologies. Using a sero-day exploit, the hacker(s) was able to drain ether tokens from several wallet accounts used to store money received from recent ICOs. Upon exploiting the bug, they managed to freeze 513,774.16 ether tokens in users’ wallets. Based on the value of ether tokens at the time, based on Ethereum price charts, the hackers had frozen about $245 million worth of tokens. The event echoed some of the previous coin attacks, and there were even fears Ethereum would have to hard fork again. However, some white hat hackers also used the bug to drain the funds safely and recover clients’ funds. Nevertheless, in the end, the hackers had still made away with $32 million in ether. (Will Coins Recover From Their Price Slump In 2018?)

Tether attack

Tether is one of the most interesting coins because it is pegged to the dollar, which means its value never fluctuates far beyond $1. Regardless, it now has a market capitalization of over $2.5 billion. In November 2017, hackers got away with over $30 million in tokens and transferred it to a different BTC address. After the attack, the company tried to assure their clients that they would try to recover the stolen Tether by releasing an update to their software that would recognize the lost coins. (How Did Tether Coin Survive The Crypto Market Selloff?)

Coincheck attack

The first major attack this year was done to Coincheck, a Japanese platform and also one of the world’s largest. This attack caused a lot of panic as it echoed the Mt. Gox attack almost 4 years earlier. More than $530 million worth of NEM coins based on NEM price charts had been stolen by hackers, causing the coin itself to depreciate by 14% upon the news. Fortunately, there’s some reprieve to those who suffered from the attack. The company’s officials said they would refund all the lost money to their clients, although at the rate of $0.81 for every NEM coin lost. It may not be as much as a client may have lost, but considering that they would be doing this out of the company’s own funds, it is a testament that the company is concerned about their clients. (Here are our: NEO Price Predictions And Forecast For 2018)

Most notorious ICO scams you should know

Numerous individuals need to get associated with ICO speculation perceiving how such undertakings could procure enormous returns. Probably the most effective ones, for example, EOS have turned into a portion of the greatest coins. By and by, there are numerous others that neglected to go anyplace, and some that were, by and large, tricks. Tricks in the ICO business had got so terrible that even the SEC cautioned speculators against such thoughts. In May this year, the SEC went even further to create a mock ICO on the internet to raise awareness for ICO scams. When an investor is convinced and is ready to invest, the site warns them that they could have been scammed. (These are the: Top 10 Most Outrageous Forex Market Scammers)

Out of the many ICO scams, some have stood out above the rest, which is the topic of this post. (Lessons on self-defense: Forex scams)

Modern Tech scam

This is probably the largest ICO scam to date, beating even some of the attacks on crypto platforms mentioned above. Modern Tech is a Vietnam based company that ran two ICOs, Pincoin and iFan. They would claim that they represented products from Singapore and India, thus earning them a Vietnamese tax code – further legitimizing their operations. First came Pincoin, whose ICO promised investors huge returns of up to 40% each month and an additional 8% for every new investor you referred. They claimed the investment would be used in an ad network and to create a peer-to-peer marketplace among other things. However, in typical pyramid scheme fashion, they were soon unable to pay back their investors, which is where iFan comes in. (Do you know: What is An ICO and How Can I Make Money On It?)

iFan was, we assume, a rescue boat, since Pincoin investors began to be paid in iFann tokens rather than fiat. iFan was supposedly a token to be used for social networks. iFan investors’ money was then used to pay Pincoin investors, but those behind Modern Tech realized the show had to end. In March this year, they packed up their offices in Vietnam and have never been heard from again. In the end, the Modern Tech scam managed to reap $660 million! Worse still, there is little hope for those who lost money that it will ever be recovered. (Try out some: Alternative Coins beside BTC to invest in)


This particular scam started off as a platform for packages for training those interested in crypto, or at least that is what was said on the company’s website. However, during their recruitment meetings, only crypto investment was discussed, indicating that this was their main idea. These ‘educational packages’ would cost between €100 to €118,000 depending on the level of product one chose. In platform, the investors would receive tokens that were supposed to be used for mining OneCoins. The lower costing packages were considered to be starter packages. What’s worse, the investors could not platform their tokens for fiat money and could only hope to sell OneCoin tokens in the OneCoin Platform, a marketplace for those who had ‘invested’ in the package. (What will happen to BTC in 2018?)

In February 2017, the service was closed down and the investors lost their cash. Facility examinations went ahead to uncover that OneCoin was a clear Ponzi scheme. Luckily, the specialists and numerous fans had been on to the ICO trick some time before the service was eventually closed down, which spared a great deal of speculators from falling into the trap. In spite of this, OneCoin still appeared to have pulled in a considerable measure of investors, which prompted examinations and charges all through 2017. The total amount stolen from investors isn’t known, but various authorities have taken action either in the form of fines or by recovering some of the money. The Italian Antitrust Authority issued an injunction and fined the company €2.5 million calling it a pyramid scheme. Indian authorities recovered $3.6 million, although $11.1 million was already transferred out while in China, $30 million was seized. (Everyone should know: The Forecast of Monero (XMR) in 2018)


The structure of BitConnect was also very similar to that of OneCoin, causing many experts and enthusiasts to call it a Ponzi scheme as well. The service was shut down on the 16th of January this year after US authorities handed the company a cease and desist order. However, the popularity of the service had all the same been damaged by some bad press on numerous crypto websites, blogs and forums. The exact amount of money lost through the BitConnect scam is not known, but it must have been in the millions of dollars since the token BCC still has a market capitalization of over $3.7 million according to Coinmarketcap. (BTC Cash Vs. BTC: Confrontation Forecast in 2018)

Unlike OneCoin where investors would receive educational material, BitConnect allowed them to buy BCC coins using either fiat or BTC. With the BCC coins, you could either trade them as the price fluctuates or invest in the company. The latter use was the most controversial because BitConnect promised enormous rewards of 40% returns each month. Many people were sceptical, and with good reason, since there can never be such a good deal. Just to put that into perspective, an investment of just $1,000 would earn you over $50,000 by the end of the first year. (Ever asked: What Would Happen To BTC Price When It Is All Mined?)

At the start of the year when crypto was really booming, BCC was trading above $400, but its value dropped by over 90% to reach $17.25 after the new it was shutting down. They had promised to allow withdrawals for the whole week, which is also the excuse BitConnect used to explain the drop in BCC value. After BitConnect shut down, many investors were devastated and took to social media to express their anger. For those who were more aware of BitConnect’s history, they would have noticed long before the US authorities took action that the UK government had also issued a threat to the company. Moreover, the overall structure that promised bonuses for referrals showed that they depended upon new investors to pay their current ones. (Every investor must know the: Basic Coin Terms You Need To Know)

BTC Savings & Trust (BCS&T)

Sometime before BTC was on the standard news media, BTC Savings and Trust had just started requesting for investors. It started in 2011 where the organizer, Trendon Shavers, guaranteed gigantic returns for their investment. A portion of the guarantees were greatly lucrative, promising up to 7% returns for each week! Similarly, as with all such Ponzi plans, it in the long run bombed in 2012 when it couldn't pay what it had guaranteed. At last, Shavers had gained 146,000 BTC from his investors, which were worth $807,380 back in 2014. Obviously, BTC value has climbed dramatically in the years to take after, implying that they were worth substantially more than that figure. All the same, Shavers was condemned to a year and a half's detainment and $40.7 million in fines. (Master the: 5 tips to forming the most promising coin investment portfolio for 2018)


Exit ICO scams are those where the ‘founders’ of the scheme advertise a potentially profitable ICO and then disappear after raising some money. CCN recently reported that ICO scams had managed to raise more than $1 billion and counting. Considering that ICOs have raised over $9 billion since 2017, the number of scams have been very significant to the ICO-sphere. (It is important to: Think Twice When Making A Deposit In A Forex Company)

PlexCoin was one of the biggest exit scams ever, having received $15 million from investors by December 2017 before they were caught. An exit scam is whereby the company holding the ICO closes shop as soon as they have achieved their target and disappear. PlexCoin was launched by the company PlexCorps and the ICO was held from August to October 2017, although it was still open beyond then. The company’s officials had advertised that PlexCoin would yield returns of 1,354% from the time the ICO was closed through the next 29 days. More than $800,000 was raised in this ICO scam. Because PlexCoin was marketed in the US, the SEC froze their accounts and charges are still pending. Apparently, the company’s founders used the money for personal expenditure. (Revealing Forex Bonuses Of Brokers: How To Identify A Real Bonus)


Unlike PlexCoin, the founders of Benebit have never been caught. This particular ICO exit scam raised between $2.7 million and $4 million before the website and all information was pulled off the internet without a trace. Not only did this scam net more money, but it was also more sophisticated. The people behind it also put in a lot of work to make it look good, spending some $500,000 on marketing efforts alone. All things considered, it was a good haul from the investment. The Benebit marketing effort was aimed at creating a buzz on social media as well as hiring ICO review websites to rate Benebit highly. This was perhaps the main reason why this ICO scam was so successful, even having been ranked among the top third percentile on ICObench, a popular ICO review website. If you want to keep your money, this is: How Not To Be Added To The 95% Of Losing Traders)

Benebit was supposed to be a reward system, sort of like the cashback and loyalty programs for many retailers. Instead of the typical systems, shoppers could be rewarded in Benebit Tokens (BNE) that they could then either use for shopping or even sell on the open market and convert to fiat. It was a great idea, except the runners of Benebit were unknown, which is how they managed to get away with up to $4 million of investors’ money. (Forex Rigging And Manipulation: How The Major Investors Pull It Off)


Just like Benebit, Centra used the power of advertisement to get investors onboard. Instead of online marketing only, though, Centra turned to celebrities like Floyd Mayweather and DJ Khaled. Through their ICO, the company raised $32 million that were supposed to be used in launching a debit card that would use both Visa and MasterCard services for transactions. It was later found out that Centra had no connection to either Visa or MasterCard, nor was it registered as US law requires all ICOs be reported to the SEC. Now, the SEC is seeking that the ‘stolen’ funds be returned, but the case is still pending. (If you own some, here are the: 5 Most Popular Uses of BTC and other Coins)

What can we learn from all these?

From all the cases above, one thing becomes clear, only fools rush in. In all cases of ICO scams, for example, the investors were duped simply because they did not investigate further to realize more about the product and company they were investing in. Additionally, they didn’t question why the deal was too good. 40% monthly returns should have at least raised an eyebrow, but unfortunately it didn’t. Therefore, we should all be very careful about where we send our monies. Fortunately, we have already highlighted all of the ways crypto scams work in order for you to avoid them in a previous post. (To avoid being a victim, you should: Learn How Coin Scams Operate And Avoid Them)

As for the attacks, we suppose that is a warning to the crypto platforms and anyone that runs a tech company or service to be more careful. Even coins, with the promise of additional security, are not invulnerable to attacks. The Mt. Gox case was particularly pertinent as it showcased extreme negligence from the company. (Do you know: How Is Spread Betting Different From Forex Trading?)


To find out more about the scams and attacks above and to put some names to faces, watch this short video highlighting the best of them:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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