The cryptocurrency boom has attracted all kinds of investors from all over the world – and with good reason. With triple digit percentage returns and an ever growing market, the demand for cryptocurrencies will only continue to increase.
While blockchain technology has changed the world for the better, the unregulated nature of the cryptocurrency market has also attracted con artists, scammers, and thieves at an unprecedented rate.
Because cryptos are not issued by a government or central financial body, victims of scams and hackers are usually left with little-to-no legal recourse.
Additionally, the manner in which cryptocurrencies are stored means that losing access to your crypto wallets means that you’ll be cut off entirely from your holdings. Read more about crypto wallets here: https://blog.tezro.com/what-is-cryptocurrency-wallet/
In this article, we’ll take a look at some of the biggest crypto scandals and losses that will make you thank your lucky stars.
- Stefan Thomas – The Man Who Forgot His Password
If you think you’re having a bad day, spare a thought for Stefan Thomas.
San Francisco-based computer programmer; Stefan Thomas is technically a Bitcoin millionaire. We say technically because his fortune i.e. $ 321 million worth of Bitcoins is locked in an IronKey; the USB hard drive storing his digital wallet.
Thomas’s USB drive gives him 10 attempts to key in the correct password before it becomes encrypted forever. Having used up 8 tries, Thomas now has 2 attempts remaining – if he fails to enter the correct code two more times, his entire fortune will be lost.
At his wits end, Thomas has one last glimmer of hope – enlisting the help of a specialized laboratory with an electron microscope in an attempt to bypass the password entry limit of the Iron Key.
At this point time, whether or not Thomas’s efforts will be successful, we cannot say. But for all of our readers out there, we recommend that you commit your crypto wallet password to memory lest you end up like poor Stefan Thomas.
- James Howell – The Crypto Enthusiast Who Threw Out a Fortune
James Howell is a London-based IT engineer who had the misfortune of accidentally throwing out the private keys that allowed him to access his stash of approximately 7,500 Bitcoins. Given the current Bitcoin price valuations, this would lead to a haul of about $280 million.
With so much on the line, Howell is attempting to sift through a council landfill in an attempt to track down his fortune. Unfortunately, his attempts to gain access to the landfill have been stonewalled by his local council citing environmental and financial concerns.
We wish James the best of luck and hope that he can eventually track down his hard drive. In the meantime, let that be a lesson to those of us who make use of cold wallets.
Always be sure to double and even triple-check everything that you throw out. The last thing you want to do is to end up throwing away a fortune in cryptocurrencies.
- Onecoin and How Ruja Ignatova Managed to Scam The World
Onecoin was supposed to be the currency that would topple Bitcoin from its throne. It would be able to facilitate payments quickly and instantaneously from anywhere around the world. A theoretical Bitcoin killer touted by Ruja Ignatova; a tech entrepreneur and creator of Onecoin.
While all of this seemed fine and dandy, Ignatova forgot to include one important point. Onecoin lacked the blockchain technology needed to make it work. She also forgot to say that Onecoin was actually a massive Ponzi scheme.
All the while, Ignatova would travel around the world touting her snake oil and duping investors everywhere. Finally after severe legal pressure from investors and the authorities, Ignatova would go on the run and is reportedly still at large.
While the unregulated nature of cryptocurrency would open up countless possibilities for entrepreneurs everywhere, Ruja Ignatova used it as a cover to conduct one of the largest crypto scams in history.
- The Binance Security Breach
With cryptocurrencies exploding into popularity, numerous crypto exchanges rose to the fore in order to cater for the increased demand of cryptocurrencies. Processing possibly billions of dollars worth of transactions on a daily basis, crypto exchanges are ripe targets for hackers.
The lack of regulation and legal ramifications means that hackers can often get away with siphoning funds from users and exchanges.
Back in May 2020, Taiwan-based crypto exchange Binance reported a loss of approximately $40 million as a result of hack attacks. While Binance agreed to cover the losses, one has to wonder how much more has been lost as a result of cyber heists.
With so much money at stake, it is likely that we will expect to see a rise in scams and cyber criminality in the future. The only way in which we can stay safe is by practicing caution and always remaining vigilant.