Infamous Shitcoin Scams and Frauds; In the exciting and ever-evolving world of cryptocurrencies, tales of scams and frauds can serve as cautionary tales for investors. While the rise of blockchain technology has brought about many legitimate and innovative projects, there are also notorious instances of fraudulent activities in the form of “shitcoin” scams.
The term “Shitcoin” is a derogatory expression utilised within the cryptocurrency community to characterise a cryptocurrency deemed to hold no value. It is frequently applied to coins lacking a distinct value proposition, use case, or sustainable development strategy. These coins often emerge during bullish market phases, enticing investors with promises of exceptional returns and groundbreaking technology, only to vanish when market conditions shift towards a bearish trend.
Infamous Shitcoin Scams and Frauds
BitConnect Crypto Scam
BitConnect, led by Satish Kumbhan, was a lending and exchange platform that operated using its native cryptocurrency, BitConnect Coin. It garnered significant attention and generated great excitement due to its promises of substantial profits.
The annual ceremony of BitConnect in 2018 became the subject of memes when investor Carlos Matos delivered an exceptionally enthusiastic performance, passionately endorsing BitConnect.
However, suspicions arose regarding BitConnect’s legitimacy, ultimately revealing its true nature as a Ponzi scheme. In February 2022, the founder of BitConnect was charged with orchestrating a global Ponzi scheme valued at $2.4 billion, resulting in the inclusion of his name in the list of Bitcoin scammers. This scandal solidified BitConnect as the largest crypto scam in history.
OneCoin Crypto Scam
OneCoin presented as an enticing cryptocurrency investment opportunity, turned out to be yet another Ponzi scheme. Orchestrated by Ruja Ignatova, a Bulgarian individual who gained notoriety as the “Cryptoqueen,” this scam captivated public attention with its astonishing storyline.
The events surrounding Ruja Ignatova’s involvement in the OneCoin scam are so remarkable that they could be mistaken for a movie plot. Having defrauded investors of a staggering $4 billion, she abruptly vanished in 2017, never to be sighted again. As a result, she currently holds a prominent position on the FBI’s most wanted list, with a reward of $100,000 offered for any information leading to her apprehension. With her actions, Ruja Ignatova has secured a place as one of the most prominent figures in the realm of crypto scams.
SQUID Token Scam
Inspired by the immensely popular Netflix series Squid Game, the SQUID token emerged as a cryptocurrency offering access to a play-to-earn game. Although the token had no official affiliation with Squid Game, its association with the show created an illusion of credibility, attracting fervent fans who eagerly invested in it.
As the token’s value rapidly surged, investors saw their initial investments multiply two or threefold. However, their excitement quickly turned to dismay when they discovered that selling their SQUID tokens proved impossible.
The entire $3.36 million invested in the SQUID token vanished into thin air in a sudden turn of events. The token essentially became worthless in a matter of minutes, causing substantial financial losses for those involved.
Interestingly, one of the defrauded investors, Hartford, expressed a surprising sentiment. Despite losing money, he displayed a sense of acceptance, stating, “You live by the sword, you die by the sword. That’s crypto,” indicating an understanding of the inherent risks associated with the volatile cryptocurrency market.
Day of Defeat Rug Pull
Day of Defeat enticed potential investors with the promise of a remarkable “10,000,000X price increase” for its token. However, this offer, which appeared too good to be true, turned out to be precisely that.
Regrettably, this project ultimately unfolded as a rug pull, resulting in a staggering loss of $1.3 million. Although the project’s team attempted to justify their actions by claiming they had been hacked, their explanation failed to garner credibility or convince anyone.
The truly unfortunate aspect of this situation is that Day of Defeat’s website contained evident indicators of a scam. Despite the clear warning signs, people were captivated by the allure of substantial returns. For instance, within the FAQ section, the project team made a seemingly reassuring statement, assuring investors that they would not touch the pool fund. However, contrary to their promise, they did precisely that, betraying their trust.
This incident serves as a reminder that investors must remain vigilant, conduct thorough research, and exercise caution when presented with offers that seem too good to be true.
Also read: How To Avoid Bitcoin Scams and Frauds: A Guide For Investors
Here’s how to identify a potential “shitcoin”:
- Lacking a clear use case or value proposition: The cryptocurrency fails to address any tangible real-world issue or attempts to solve a problem that simply doesn’t exist.
- Making ambiguous claims in the whitepaper: The project’s whitepaper may present extravagant assertions without providing concrete evidence or a clear methodology. The technology underlying the project may be described using convoluted or imprecise language to create an illusion of innovation where none truly exists.
- Lack of observable development activity: When there are no recent updates on the project’s GitHub page, it suggests a potential abandonment by the developers, with no ongoing progress or engagement.
- Inadequate or anonymous team: A legitimate project is usually backed by a genuine team comprising recognizable and esteemed individuals within the industry. If the project team remains anonymous or lacks verifiable experience in the relevant field, it raises concerns and signals a potential red flag.
- Pre-mined or insta-mined supply: When the creators have pre-mined a significant portion of the coin supply, it may indicate their intention to swiftly sell these coins on the market for immediate profits, potentially undermining the project’s long-term sustainability.
- Pump and dump behaviour: The price of the coin rapidly increases due to hype and then quickly crashes. This is often a sign of manipulation.
- Limited exchange listings: Legitimate coins typically secure listings on reputable and established cryptocurrency exchanges. If a coin is solely listed on obscure or lesser-known exchanges, it raises concerns about its legitimacy and credibility.
- Insufficient transparency: When a project lacks clear and transparent communication from the team or provides sketchy details about its goals, operations, or roadmap, it serves as a red flag. Openness and transparency are crucial elements for establishing trust and credibility within the cryptocurrency community.
