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Crypto Scams Getting Bigger and More Sophisticated

Author Erica Stanford has shone a light on the dark side of crypto trading, which highlights the need for greater regulation in the crypto sector. Image: Provided.

Scams are rife in crypto, partly because crypto exchanges are at fault, but also because of sudden hacks, plus teams of fraudsters that are becoming increasingly sophisticated via the use of experienced multi-level marketers, who lure victims and their friends into vast Ponzi schemes


Crypto hacks and scams are affecting more people, taking more money and getting more sophisticated every day. Where a few years ago, the worst scams were, to a trained eye at least, often almost indistinguishable from a Ponzi scheme, or at least gave off enough warning flags to leave an indication that all was not well, today scams can be far harder to recognise.

Scammers are moving from scam to scam and are now so advanced in the technology and marketing required that they are able to easily part millions of people from their money. Scams are more varied than ever before. Some hacks hit suddenly, targeting vulnerable crypto exchanges and wallets, which sometimes store billions of dollars of their users’ crypto. Or hackers target crypto projects that have raised funds or are holding their users’ crypto but have not taken adequate security measures to protect it.

In some cases, it is the crypto companies at fault – having failed to use the institutional grade custody solutions that are available that would serve to prevent many hacks if used. The founders of some crypto projects and exchanges are themselves sometimes directly at fault. There have been more than a few cases of founders exiting after a scam, disappearing with billions of dollars of their users’ money. This happened most recently and notoriously with Turkish exchange Thodex, where the founder disappeared with $2.2 billion of his users’ crypto.

Other scams go on for years, continuing to promote themselves and scam people actively trying publicly to stop them. As it can take multiple months, and in most cases, years, for law enforcement to investigate these scams and then react, scams continue and grow even whilst being investigated.


Often, the real experts behind crypto scams jump from scam to scam, taking their accrued expertise in orchestration, in marketing, promotion, and in the technology involved onto other scams. This is how some of the newer scams are able to be so sophisticated – their websites, marketing and reach can be almost unparalleled. Scammers can replicate websites, social media handles and email addresses and make their fraudulent versions look real. They can also take over social media channels of celebrities and influencers, again making these imitations look almost indistinguishable from the real thing.

The Onecoin scam

Onecoin – an infamous scam – was the first to blend multi-level marketing with crypto, turning the profit-making claims possible with crypto into Ponzi schemes affecting millions. Onecoin, now thought to perhaps be the biggest-generating crypto scam of all time, was the first to realise the money-making potential of bringing multi-level marketing – a sales structure that is morally dubious at best and inexplicably still generally legal – to the money-making potential of digital money. This blend of marketing and crypto has since been used in and copied by multiple scams, using expert marketeers and even their own victims to promote them to bring in more victims and their money.

The incentive structure in multi-level marketing acts as a Ponzi scheme – offering high rewards and returns for those who get in early and bring in others – creates profitable incentives for people to encourage investment into these scams. Those who get in earliest make the most money, up to hundreds of millions of dollars, and are highly incentivised to bring as many people into the scam as they possibly can.

The high returns sometimes seen in crypto, coupled with a generously paying incentive structure which pays out high commissions to those who bring other people in to invest, explains how the biggest crypto scams have grown so large and affected so many people, extracting tens of billions of dollars from millions of people around the world.

Vietnam’s Pincoin

One such scam that employed these tactics, was Vietnam-based Pincoin. This scam spread over Asia, selling packages of what it claimed to be crypto coins, before its founders left in one of the most high-profile crypto scams, disappearing with $660 million of 32,000 people’s money.

Much of this money is still lost. The problem was, the scam promised high returns, but this occurred at a time when many legitimate crypto projects were offering similar returns. The returns promised – in the context of volatile crypto markets – were plausible.

Crypto, a few years ago, was also hard to get into. The user experience just wasn’t there. Pincoin promised to make it easier for regular people to get their share of crypto riches. People wanted to get into crypto, wanted to make these returns, and as a result, wanted to believe the claims, and therefore were more prone to falling for these claims.

The problem is, it’s not just the scams scamming people. The largest and worst crypto scams involved the best teams of multi-level marketers, professionals who had huge downlines, who knew exactly how to win people over and get them to invest.

The scams tend to initially pay out, so those who are brought in early often trust the scams, in turn bringing in their own friends, families and communities to invest. By the time a scam is publicly revealed as such, the leaders and multi-level marketeers have typically moved on to the next, leaving the victims with no recourse to get their money back.


Crypto Wars: Faked Deaths, Missing Billions and Industry Disruption by Erica Stanford was published by Kogan Page on July 3. Priced at £14.99, it is available online and from all good bookshops.



$3.6 billion allegedly stolen from Africrypt exchange


AF China Bond