A couple of years back, the term “exit scam” became synonymous with the crypto industry. This was at a time when the market (at large) was replete with a number of cash grab ventures that looked great on paper but had little to no substantive value to back them up. In its most basic sense, an exit scam can be thought of as a fraudulent scheme wherein the organizers of an initial coin offering (ICO) or a similar fundraising avenue disappear with their investors' funds after acquiring a sizeable sum of money. In this regard, during November 2017 — a …

As the appeal of cryptocurrency has grown, so has the opportunity for scammers to part naive investors from their money. 2019 has been no exception, with cryptocurrency and blockchain forensics company Ciphertrace dubbing it “the year of the exit scam.” Exit scams are not a new phenomenon, with a 2018 report conducted by Statis Group revealing over 80% of initial coin offerings (ICOs) in that year to have been fraudulent. Here, Cointelegraph explains exit scams and how to spot them, as well as a look at some of the biggest scams that have been discovered by various researchers. What are …

Indian police have reportedly discovered an alleged multi-million dollar cryptocurrency scam, involving a BitConnect promoter, local media outlet the Times of India reported on June 3. The Criminal Investigation Department (CID) in Gujarat, India, has accused Divyesh Darji — a promoter of now-defunct cryptocurrency investment program BitConnect that ceased its operations in January of last year — of luring people to invest into “Regal Coin,” promising unrealistic returns of as high as 5,000% on investment. A CID official said that the estimated amount of the scam reaches into the tens of millions of rupees. Per the CID, Darji began offering …

The United States Federal Bureau of Investigation (FBI) is seeking to contact investors in alleged ponzi scheme Bitconnect (BCC) that collapsed in January last year, a news statement confirmed on Feb. 20. As part of ongoing investigations into the activities of the well-known but shadowy scheme, the Cleveland branch of the U.S. law enforcement agency appealed to ex-investors to give information about their interaction with Bitconnect. A dedicated questionnaire is already available online, Special Agent Vicki D. Anderson explaining that responses would assist investigators in identifying those affected by monetary loss. “The FBI is seeking potential victims who invested in …

2018 will long be remembered as the start of a significant cryptocurrency bear market, but the declining market still provided opportunities for scam artists to snag unwary investors. Given that 2017 was a breakout year for Bitcoin (BTC) and the likes, investors were clamoring to enter the fray as the price of cryptocurrencies skyrocketed toward the end of the year. With such a positive environment, businesses and developers looked to leverage blockchain technology for new projects, leading to a boom of new initial coin offerings (ICO) that has collectively raised more than $20 billion since the beginning of 2017. This …

The Federal Court of Australia has imposed a travel ban and frozen the funds of John Bigatton, a promoter of reported $2.6 billion Ponzi scheme Bitconnect, daily newspaper The Sydney Morning Herald reports on Jan. 5. Bigatton is reportedly listed as a director and shareholder of BitConnect International Plc and the only representative of Bitconnect Australia. Bigatton’s wife, Madeline Bigatton, is reportedly the sole director and shareholder of JB’s Investment Management, a company whose assets have been frozen, that is believed to be linked to Mr. Bigatton. According to the aforementioned article, Mrs. Bigatton went missing in March and has …

An American musical prelude Bitconnect, the now-defunct crypto lending and exchange platform that has been ousted as a ruinous Ponzi scheme, has memorably been compared by the Silver Miller law firm to the fleeting 2011 Broadway musical “Wonderland,” based on the dizzying impossibilities of Alice’s adventures in Lewis Carroll’s celebrated novel. Silver Miller’s first class action complaint was filed on behalf of six defrauded Bitconnect investors in late January, just weeks after the Texas Securities Commissioner issued an emergency cease-and-desist order against Bitconnect for the selling of unlicensed securities. The complaint unconventionally opened with the following lyrics: “Welcome to Wonderland …

Authorities from two U.S. states have implored the Criminal Investigation Department (CID) in India to seize the property of promoters of Bitcoin (BTC) investment firm BitConnect, the Times of India reported September 11. BitConnect, which ceased its operations in January of this year, was an open-source cryptocurrency and an investment program accused of being a Ponzi scheme. The accusations were based on the multi-level referral system and promise of astronomical returns on customers’ investments. The U.S. states of Illinois and Arizona are asking the CID to seize the property of the promoters, who are suspected of raising Rs 41,000 crore …

Indian police have arrested a man who was allegedly involved in promoting the Bitconnect investment scam, Financial Express reported August 18. The suspect, Divyesh Darji, is said to have been the India head of Bitconnect, the high-yield investment program that ceased its operations in January 2018 after coming under scrutiny for appearing to be a fraudulent Ponzi scheme. Darji, a resident of Surat city, had reportedly already been issued with a look-out circular and was arrested August 18 in Delhi airport, after a tip-off from local immigration services. Financial Express cites Inspector P G Narwade of Criminal Investigation Department (CID-Crime) …

The Texas State Securities Board (SSB) has issued an emergency cease and desist order to a network of cryptocurrency-related firms, the SSB announced in an official statement July 12. SSB commissioner Travis J. Iles took emergency action on July 11, suspending a group of crypto-related companies that allegedly offered fraudulent crypto investments to state residents. According to the order, the companies are immediately suspended from offering securities in Texas until the security is registered or exempt. The order lists a Utah-based network of three companies; Mintage Mining LLC, Symatri LLC, and NUI Social. According to the SSB’s statement, Mintage Mining …

According to court documents filed July 3, YouTube has been added as a defendant in a class action lawsuit against BitConnect. The lawsuit was initially filed on January, 24 by six individuals represent by law firm Silver Miller. The claimants state that crypto investment platform BitConnect issued crypto tokens that were unregistered securities, and obtained additional funds through a “wide-ranging Ponzi scheme.” The plaintiffs stated that their personal losses totalled $771,000. BitConnect allegedly used the funds received from new investors to meet the expectations of the existing ones. Per court documents acquired by Cointelegraph, BitConnect and its affiliated parties posted …

Cryptocurrencies have revolutionized the way the world looks at transactions - but they’ve also facilitated some monumental scams over the past nine years. The success of Bitcoin and a number of altcoins jumpstarted an industry that is incorporating Blockchain technology in a number of innovative ways. While the smartest minds have created some game-changing companies backed by the power of Blockchain and cryptocurrencies, nefarious minds have also jumped on the bandwagon, fleecing unwitting investors in elaborate scams. ICOs fever spawns massive scams Since Bitcoin’s inception in 2009, people have become increasingly enamoured with the idea of Blockchain technology. Over time, …