Scams were among the leading causes of cryptocurrency deaths, accounting for more than 500 doomed coins so far.
This is the finding of the latest report from Traders of Crypto, which analyzed more than 2,300 “dead” cryptocurrencies to discover what caused so many projects to disappear.
A tour of the crypto graveyard
As of January 2022, the cryptocurrency industry has officially buried nearly 2,400 cryptocurrencies. About 1,000 of them died in the last two years alone, research by Traders of Crypto has shown.
This 71% increase in the number of dead coins can be attributed, at least in part, to the ruthless environment of the DeFi summer of 2020, which saw hundreds of projects disappear.
According to the report, 1,596 coins have been declared dead due to neglect or lack of volume. This means either their trading volume stayed below $1,000 for three consecutive months or their websites were closed or abandoned by developers.
The rapid pace of development of the crypto industry is not sympathetic to projects that fail to keep up, so the large number of tokens that died due to this is not surprising.
What is surprising is the number of tokens that died as a result of scams.
Table showing the five most common reasons coins die (Source: Traders of Crypto)
The report identified 528 fraudulent cryptocurrencies, ranging from elaborate multi-billion dollar Ponzi schemes to low-volume bombs and dumps. This category also includes coins that died as a result of robberies and robberies, though that number is significantly lower than founder-run scams.
Scams: the most lucrative crypto business
As of January 2022, more than $7.1 billion has been lost to cryptocurrency scams. Of that $7.1 billion, $6 billion was lost to just two scams: OneCoin and BitConnect.
The biggest scam coins in crypto history (Source: Traders of Crypto)
OneCoin is by far the biggest scam the cryptocurrency industry has ever seen. Official FBI filings put the amount OneCoin defrauded investors at around $4 billion, none of which has returned to investors.
OneCoin could also be considered the biggest scam in the world given the number of people who invested in the classic Ponzi scheme. According to data from OneCoin, the so-called “Bitcoin killer” had more than a million investors at one point.
The scam ran from 2014 to 2016 and had the advantage of being first to market. As cryptocurrencies remain a niche asset class, OneCoin’s extravagant marketing and promises of extravagant returns caught the attention of an incredible number of retail investors.
OneCoin promised fast and easy payments and a much more accessible infrastructure than Bitcoin. Investors who wanted to take advantage of the opportunity were offered several different “packages” of tokens, which could only be purchased in cash. These tokens would generate more OneCoins for their owners: the more expensive the package, the higher the benefits. The company also did not do much to hide its very clear MLM organization, as the people who brought new users to OneCoin earned income from every purchase they made.
When the time came to launch OneCoin Exchange, the only way to cash out OneCoins, the company went out of business and its founder Ruja Ignatova mysteriously disappeared. And while several other high-ranking OneCoin executives were arrested and convicted of fraud, Ignatova and her brother are still missing, along with the $4 billion.
From the ruins of OneCoin emerged BitConnect, the second largest cryptocurrency scam. Founded in 2016 as a lending protocol, BitConnect offered users daily interest payments calculated by a controversial “trading bot.” These payments would increase if the BCC token owner attracted more buyers; at one point, BitConnect offered 1% daily compound interest.
The BCC token quickly became the best performing coin on the market, going from a post-ICO price of $0.17 to over $500. However, as more regulators began breaking on BitConnect and issuing warnings for illegal operations, the official website was shut down and dragged the price of the token to the ground and blocked all BCC tokens. And while many investors they eventually received their BCC back, its value plummeting to almost zero and leaving their investments worthless.
The founders of BitConnect, however, took out more than $2 billion worth of Bitcoin before shutting down the project. Last year, the founder of BitConnect, Satish Kumbhani, and his main promoter, Glenn Arcaro, were arrested and loaded with fraud: Arcaro pleaded guilty, while Kumbhani’s whereabouts are still unknown.
Featuring a roundup of the biggest daily stories in the world of crypto, DeFi, NFT, and more.
Obtain a edge in the crypto market
Access more information and crypto context in each article as a paid member of CryptoSlate Edge.
Join now for $19/month Explore all the benefits
This post More than $6 billion has been lost in just two crypto scams
was published first on https://cryptoslate.com/over-6-billion-has-been-lost-to-just-two-crypto-scams/