A sneak-peak into top crypto & NFT scams that spooked cryptoverse in 2022

The year 2022 has been a contagion for the cryptoverse. Sitting at the last month of the year, tens of billions of dollars in cryptocurrency and NFTs have already been pillaged and plundered. While the value of cryptos and NFTs being stolen is stunning, not everything is solely about money.

By Jasmine Anand:

The value of cryptocurrencies has dwindled since the beginning of this year, which has been marred by a series of high-profile bankruptcies throughout the year. Moreover, as cryptocurrency markets are reeling after the collapse of the FTX exchange, India Today’s Emerging Tech team looks back on this nascent industry throughout the year, which is haunted by crypto winter, unscrupulous activities, and shrunken investors’ sentiments.

Interestingly, it is pointed out that the combined market cap of all cryptos declined from about $3 trillion in November last year, to about $900 billion currently. Here, it must be mentioned that the value of cryptocurrencies deteriorated throughout the year, stemming from a series of bankruptcies after the dramatic crash of Terra’s UST algorithmic stablecoin in May 2022.

Hence, without further hurly-burly, here are some of the boldest crypto and NFT scams, and frauds, which have spooked the entire cryptoverse.

The implosion of Terra’s UST

Terra network and Do Kwon, its leader, grew in stature in the cryptocurrency world over the course of four years, all ending in a disastrous fall from grace. The implosion of Terra’s UST algorithmic stablecoin ecosystem wiped around $60 billion out of the digital currency space and its UST stablecoin de-pegged from parity with the US dollar and fell to $0.12 in early May from $1.

Later this year, a South Korean court issued an arrest warrant for the founder of Terraform Labs, which is the parent company of the crashed stablecoin TerraUSD.

Pincoin Scam

Pincoin was touted as one of the most promising Vietnamese cryptocurrency business models for investors and focused on asset sharing. As per the reports, it promised an unbelievable high ROI of about 312 percent, which is a major red flag because no project can promise a return on investment, let alone an ROI of that size.

Backed by cryptocurrency company Modern Tech, it was built behind an Initial Coin Offering (ICO) investment program, that allowed around 32k people to invest almost $660 million dollars. Once they raised around $660 million, the team disappeared from their offices, and only social networks are live right now. Even their website stopped responding and is currently down.

Morris coin scam

The ED (Enforcement Directorate) had unearthed a Morris coin fraud to the tune of Rs 1200 crore during the raids conducted by the agency at 11 places across the country. This scam was initiated by Nishad, a resident of Kerala.

Investors were promised to be paid 3 percent every day on a minimum investment of Rs 15000 made to purchase Morris Coin, a fake cryptocurrency. The accused and his partners allegedly collected deposits from investors under the guise of an Initial Coin Offer (ICO) for the launch of the Morris Coin cryptocurrency.

Agents were given about 10-15 percent commission to bring clients. Nishad promised investors that the cryptocurrency was to be listed on the Franc exchange, a fake crypto exchange based out of Coimbatore, after which, the value of the tokens would increase multifold. However, the coins were never listed. Several FIRs were registered by the cheated investors and the prime accused was later arrested by Kerala Police.

Baller Ape NFT scam

The US authorities have announced criminal charges against the Baller Ape Club NFT collection’s creator for involvement in the “rug pull” scam, which is nothing but ending the purported investment project, deleting its website, and stealing the investors’ money.

As per reports, Le Anh Traun, a Vietnamese national and his co-conspirators pulled down the website and fled with investors’ money after the first-day public sale of Baller Ape NFTs in the Central District of California. The NFTs depicted various cartoon figures, including those of an ape.

Traun collected close to $2.6 million from the Baller Ape NFT scam and now faces up to 40 years in prison.

FTX debacle

FTX, one of the most prominent crypto exchanges in the world, was established in the offshore finance haven of the Bahamas in May 2019. In November this year, public reports began circulating citing leaked internal financial statements and questioning the health and liquidity of both the exchange as well as its trading arm, Alameda Research.

The fall of the disgraced crypto exchange began in earnest when Changpeng Zhao, Binance’s CEO, stoked a bank run on the FTX exchange with a tweet stating that his exchange would liquidate its holdings in FTX’s native FTT token.

Finally, on 17 November, FTX filed for bankruptcy, leaving at least a million depositors unable to access their funds. And, its ex-CEO, Sam Bankman-Fried was arrested for “financial offences” against laws in the US and The Bahamas. The charges against him included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering.

It is pointed out that SBF secretly transferred $10 billion of customer funds from FTX to his trading company Alameda Research, which raised suspicion amid the crypto community. And, a large portion of that total has since disappeared. A report suggests the missing amount to be around $1.7 billion.

Bottom Line

The cryptocurrency market is marked by risk and extreme volatility. However, it is not regulated, thus allowing scammers to easily target the market. Hence, investors must be cautious and follow due diligence so that they do not get duped in the crypto world.