Crypto’s Biggest Scams and Rug-pulls

1. Mt. Gox Hack (2014) Gox Hack (2014)

Once handling over 70% of global Bitcoin transactions, Japan’s Mt. Gox exchange collapsed in early 2014 when hackers siphoned off approximately 850,000 BTC—then worth about $450 million—over several years. Poor security practices and delayed breach detection allowed the theft to go unnoticed until withdrawal requests overwhelmed the insolvent exchange. Mt. Gox’s failure spurred tighter exchange regulations worldwide.

2. OneCoin Ponzi Scheme (2014–2017)

Touted as “the next Bitcoin,” OneCoin raised an estimated $4 billion from over three million investors by selling educational packages including token bundles. In reality, no functional blockchain existed. Founder Ruja Ignatova vanished in 2017, and key operatives have since faced charges in multiple jurisdictions—OneCoin remains one of history’s largest Ponzi schemes.

3. PlusToken Scam (2018–2019)

Disguised as a high-yield “crypto wallet” app, PlusToken attracted over two million users—mostly in Asia—with promises of 9–18% monthly returns. Operators collected some $2.9 billion worth of Bitcoin, Ethereum, and other tokens, then laundered funds through mixers and exchanges. Arrests in late 2019 led to partial fund recoveries, but the collapse drove down BTC prices and exposed peer-to-peer market vulnerabilities.

4. BitConnect Ponzi & Exchange (2016–2018)

BitConnect combined a lending program promising up to 40% monthly returns with its own token, BCC. Investors funneled roughly $2.6 billion into the scheme before regulators in Texas and North Carolina issued cease-and-desist orders. In January 2018, BitConnect abruptly shut down its lending platform, causing BCC’s price to plunge from over $400 to under $1.

5. FTX Collapse & Misappropriation (2022)

Once the world’s second-largest crypto exchange, FTX imploded in November 2022 after a liquidity crunch revealed that customer deposits had been commingled with Alameda Research, its sister trading firm. An estimated $8.7 billion of user funds went missing, triggering bankruptcy filings and criminal charges against founder Sam Bankman‑Fried.

6. Terra Luna Crash (2022)

Terra’s algorithmic stablecoin, UST, maintained its peg through a mint‑and‑burn mechanism with the native token LUNA. In May 2022, a market downturn triggered a death spiral: UST lost its $1 peg, LUNA’s supply hyperinflated, and both tokens collapsed—wiping out over $40 billion in market value within days.

7. QuadrigaCX “Missing” Funds (2019)

Canada’s largest crypto exchange, QuadrigaCX, suddenly halted withdrawals when founder Gerald Cotten died—supposedly taking the private keys to cold wallets containing about CAD $190 million (≈ $140 million) to his grave. Subsequent investigations revealed mismanagement and poorly secured funds.

8. The DAO Hack (2016)

The Decentralized Autonomous Organization (DAO) on Ethereum raised $150 million via smart contracts. Attackers exploited a recursive-call vulnerability to drain roughly a third of the funds (about $60 million). The incident led to Ethereum’s controversial hard fork, giving rise to ETH and ETH Classic.

9. Bitfinex Hack (2016)

Hackers breached the Bitfinex exchange by exploiting vulnerabilities in multi-signature wallets, stealing approximately 120,000 BTC (around $70 million then). Bitfinex issued “BFX tokens” as IOUs, redeemable over the following two years.

10. Silk Road & Ross Ulbricht (2011–2013)

Silk Road, the darknet marketplace, facilitated transactions totaling about 214,000 BTC (valued at roughly $183 million at the time) before U.S. authorities shut it down in 2013. Founder Ross Ulbricht was sentenced to life in prison for money laundering, drug trafficking, and conspiracy.

11. Coincheck Hack (2018)

In January 2018, Tokyo-based Coincheck suffered a breach that saw 523 million NEM tokens—worth about $530 million at the time—stolen from a hot wallet. Coincheck reimbursed users from its own capital, but the event underscored exchange hot wallet risks.

12. Poly Network Hack (2021)

One of DeFi’s largest heists: attackers exploited cross-chain vulnerabilities to siphon over $610 million in crypto across multiple blockchains. In a surprising turn, the hacker returned most of the funds after negotiations, citing “fun.”

13. Wormhole Bridge Exploit (2022)

The Wormhole cross-chain bridge lost approximately $320 million in wrapped ETH when attackers minted tokens without depositing collateral. Wormhole’s guardian network was overhauled post-attack, and the Foundation covered users’ losses.

14. Cream Finance Flash Loan Attack (2021)

A flash loan exploit on Cream Finance drained roughly $130 million across token markets. The attacker manipulated token prices on Curve Finance pools, then repaid the loan, leaving Cream with significant undercollateralized debt.

15. Euler Finance Hack (2023)

Euler Finance’s protocol vulnerability allowed attackers to steal about $200 million by manipulating interest rate parameters. Euler paused its markets immediately, and the team offered a $10 million bug bounty to recover funds.

Significant Small Coin Rug-Pulls

Beyond major scams, retail investors continue to fall victim to small-cap rug-pulls:

• Squid Game Token (SQUID, 2021): Surged from $0.01 to over $2,800 before developers drained ~$3 million in liquidity pools.
• DeFi100 (DF100, 2021): Locked in $32 million of investor funds upon launch when developers lost control of keys.
• Odin Protocol (ODIN, 2021): Pulled ~$4 million of liquidity on launch day, leaving holders with worthless tokens.
• Compounder Finance (CP3R, 2022): Transferred all presale liquidity (~$5 million) to dev wallet at launch—locking out investors.

Legitimate Wealth Makers in the Crypto Industry

Beyond the scams and exploits, the crypto space has also created immense legitimate wealth for founders, early adopters, and developers who built the industry’s foundations:

• Satoshi Nakamoto: The pseudonymous creator of Bitcoin is estimated to own around 1 million BTC—worth tens of billions at peak prices—making Nakamoto one of the wealthiest individuals globally.
• Cameron and Tyler Winklevoss: Early Bitcoin investors and founders of the Gemini exchange, the Winklevoss twins reportedly hold over 100,000 BTC, translating to several billion dollars in net worth.
• Changpeng Zhao (CZ): As the founder of Binance, the world’s largest crypto exchange by trading volume, CZ’s net worth has fluctuated but peaked above $30 billion.
• Brian Armstrong: Co-founder and CEO of Coinbase, the first major publicly traded crypto exchange (NASDAQ: COIN), Armstrong’s stake has made him a billionaire with a net worth often exceeding $2 billion.
• Vitalik Buterin: Co-creator of Ethereum, Buterin holds significant ETH holdings and post-Foundation allocations totaling hundreds of thousands of ETH—valued at over $1 billion.
• Arthur Hayes: Former CEO of BitMEX, Hayes became a billionaire through the exchange’s success, with net worth estimated in the high single-digit billions.
• Anonymous Early Miners: Individuals who mined Bitcoin in its infancy (2009–2010) captured tens of thousands of BTC at negligible cost; those early coins are now worth hundreds of millions or more.