Cryptocurrency is a new currency that adds value to our society in one way or another. After all, it is backed by a decentralized blockchain network. However, just like any other technology, some people love to cheat. Cryptocurrency is not different.
The whole idea of scams come from the idea of decentralization. As no one is governing anyone, it is easy to scam if the scammer or startup, in this case, can show some form of credibility. Once they raise money through initial coin offering, they do an “exit scam.” Yes, they simply run away with the investor’s money.
The exit scams took more frequently in the past couple of years thanks to the popularity of initial coin offering(ICO). The numbers are big, and in 2018 alone, $100 million has already been stolen in the form of exit scams.
In this article, we will be listing the top 5 crypto exit scams out that happened until now. The article aims to improve your understanding of how big exit scams can be. So, without any delay, let’s get started.
Note: The exit scams are not in any particular order.
Table of Contents
Top 5 Crypto Exit Scams
1. PinCoin token – $660 million
PinCoin is undoubtedly one of the biggest ICO exit scams in cryptocurrency. It is executed by a Vietnamese company, Modern Tech. To raise money, they started their ICO where they would give investors PinCoin token in return for investors’ money. They managed to raise an astounding $660 million from just 32,000 people.
The twist arrived when they launched another token iFan and started offering iFan to the investors of PinCoin. iFan was a token for celebrities to be used on social networks.
After that, Modern Tech company completely vanished. The team behind the whole scam left the Vietnamese company and settled in unknown places. If you want to know more, we recommend reading complete coverage by TechCrunch here.
2. PlexCoin – 15$ million
PlexCoin exit scam took place in December 2017 when its ICO came to a halt by the US Securities and Exchange Commission(SEC). The action by SEC took place after the found Dominic Lacroix was found to be defrauding Canadian and American investors.
So, what went wrong? Lacroix advertised that PlexCoin would give the investor a return of an astonishing 1,354%. This caught the attention of the SEC. Even experts didn’t approve the ICO due to its exuberant claims. Another reason for the red flag was Lacroix’s idea to push fake experts to give PlexCoin an excellent rating. Ratings are important, and are used to convince novice investors.
SEC then froze the $15 million funds and the company was fined $100K for the scam. The CEO Dominic Lacroix was also jailed. This is one of the biggest attempted exit scams which was stopped right before the tracks.
3. Pure Bit – $30 million
Even cryptocurrency exchanges are into exit scams. Pure Bit, from South Korea, a cryptocurrency exchange carried out an exit scam. They got away with $30 million of user funds. The first sign of the scam came when they started to delete their social media accounts. At the same time, they also started to kick out their users from the famous KakaoTalk chat groups.
The final nail in the coffin came when they renamed their chat group to “I’m sorry.” It was evident that they had done an exit scam. The scam took a toll of $30 million, i.e., 13,000 Ethereum(ETH) at the time of the exit scam. They also moved $10 million worth of ETH from the Pure Bit’s address.
4. Prodeum – $0.5 million to $1 million
Prodeum was an interesting project that aimed to provide a fruit and vegetable coding system. They advertised themselves to use Ethereum blockchain and asked investors to invest using ETH.
However, their exit stunt was one of the worst. After raising money, they updated their site with one single word, “penis.”
At the time of the website change, all the social media accounts vanished. They also removed their white paper. This didn’t end here as one of the project founders came forward and said that he was a victim of identity theft. He also mentioned that he never heard about Prodeum and trying to figure out who used his identity. Nevertheless, Prodeum successfully scammed somewhere between 430 ETH to 970 ETH which at the time of the scam ranged from $500k to $1 million.
5. BitConnect – $2.6 billion
If we had to list the king of all exit scams, then BitConnect would be the king. BitConnect was a Ponzi Scheme where the investors are attracted with a 40% return promise. That’s not all, they have lucrative money back schemes divided into a four-tiered system. Overall, the investors are pulled into the project with a one percent gain per day.
Even with experts calling out BitConnect, it managed to garner a huge $2.6 billion from the market before it decided to do an exit scam. The process started when they closed their internal exchange platform and also depriving investors any money.
How to protect yourself from exit scams?
So, as an investor, how can you protect yourself? Well, you can do by staying attentive and understanding the project you are investing in. Most of the time, investors invest because of hype surrounding the project or follow the herd mentality. Start from reading the white paper and then learn about their team. Verify every single possible information that you can or read reviews. Also, look out for fake profiles. Even if you do follow all the things, you might get bad ICOs, but the chances will become slim with each passing experience.
These top 5 crypto exit scams prove that coordinated scams can fool a large number of people, even established websites that regularly rate ICOs on their credibility. In short, the decision to invest is always on the individual investor and no one else. You need to use your own judgment, and you will do mostly fine. So, what do you think about the crypto exit scams? Did you get scammed in any of the projects mentioned above? Comment below and let us know.