Digital cryptocurrencies have several major benefits over the normal currency. Ranging from bypassing the involvement of regulatory bodies during transactions to the inexistence in interference from other financial intermediaries. However, there are some significant drawbacks associated with the digital currencies as well. This article discusses how the investors of Bitcoin, world’s leading cryptocurrency, have been exposed to scams and frauds in the recent past.

Bitcoin’s Recent Performance

Bitcoin is taking the digital world by storm. It’s high monetary value and encrypted public ledger, known as the blockchain, which keeps an online secure record, has attracted enormous amounts of individual as well as corporate investors.
Many companies are accepting the payments through Bitcoins these days. However, on the contrary, it has also become a hub for many digital hackers. With the rise in the bitcoin value, many people are showing interest in investing in bitcoins. For more information about bitcoin’s recent performance, visit bitcoin champion
The impact of COVID-19 crisis is also worth noticing as the bitcoin market activity increased significantly during this period. There was a sudden flight to liquidity, and so, a lot of investors had margin calls in Equity that had to be covered by liquidating other assets like Bitcoins into cash in order to meet those margin calls. This increased trend of bitcoin transactions therefore attracted different hackers, fraudulent groups and scams. 

Bitcoin News Report on Defi Protocol BZX $8.1 Million Hack

Bitcoin News, world’s leading news platform about bitcoin news, reported that BZX on Sunday lost $8.1 million in a new hacking attack on Sunday, September 13. BZX is a financial primitive for shorting, leverage, borrowing, and lending. The company suffered a third attack this year, caused by a flawed code in its smart contracts. Hacker took the advantage of the bug by bagging 219,200 LINK tokens valued at $2.6 million; 4,503 ETH ($1.65 million); 1,756,351 USDT ($1.76 million); 1,412,048 USDC ($1.4 million) and 667,989 DAI worth of $681,000.

Hackers Loot $5.4 Million Worth of Bitcoins from European Crypto Exchange

According to the reports issued by Bitcoin.com, Eterbase, a Slovak cryptocurrency exchange, were hacked on Thursday, September 10 for $5.4 million. Cybercriminals broke into six hot wallets containing bitcoin, ethereum, algo, ripple, tezos, and tron, and stole everything. Hot wallets are digital accounts for assets which are connected to the internet. Eterbase claimed that it used these hot wallets to conduct several online trading activities. However, these hot wallets have been claimed to be prone to online hacking attacks. This news has been particularly alarming as it was a second successful attack on cryptocurrency exchange by hackers. Another European crypto exchange named ‘Cashaa’ fell victim to an attack and lost 336 bitcoin valued around $3.1 million at the time to hackers. The London-based platform claimed that the hacker attacked one of its Blockchain.com wallets, which is utilized to store BTC and make transfers from the exchange.
Bitcoin exchanges have become a major site for scams and frauds for cyber-criminals all around the world. Last year, Japan’s Bitpoint was raided for $32 million, which was followed by ‘Upbit’, a South Korean platform. They suffered a $52 million loss. Zaif, another Japanese exchange, was attacked for $60 million in 2018.

Authorities Alerted as Cryptocurrency Fraud Surges

Worldwide, law enforcing authorities have been actively tracing any fraudulent aur suspicious cryptocurrency activities. An example is the South Korean police raid, at the country’s largest cryptocurrency exchange, Bithumb on September 2 as part of an investigation of fraud allegedly committed by the organization’s main shareholder. According to a local publication, the Seoul Metropolitan Police Agency’s Intelligent Crime Investigation Unit searched and seized premises used by the exchange as headquarters in Gangnam-gu, Seoul. Police action appears to stem from the alleged investment fraud committed at the issuance of the BXA, the exchange’s native token. 

The U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) also identified and traced a trio in the Maryland District, who had scammed over $28 Million in bitcoins and forex, by over 1000 investors. The person leading the group, Dennis Jali, a South African, was then prosecuted and charged of fraud by the Maryland District Court. 

On July 31, Bitcoin.com news reported Chinese law enforcement arresting 109 individuals allegedly connected to the Plustoken project. The Plustoken was a fraud scheme, which collected a wide range of crypto assets. It was a Ponzi scheme which claimed to offer high-yield returns after people deposited funds into the system. Following the arrest of 109 accused members of the $6 billion Ponzi scheme, six alleged members of the team were prosecuted in the courts of China.

Final Analysis

Although law making authorities continue to trace and prosecute cybercriminal committing crypto scams and fraud, the fraudulent activity continues to exist and grow. According to Chainalysis and The Wall Street Journal, the cost of criminal activity related to cryptocurrency amounted to approximately $4.3 billion in 2019. These figures were bigger than either of the preceding two years combined. Reports from Watchdog Whale Alerts have indicated more than $24 Million worth of fraudulent activity of the BTC alone, during the first 6 months of the year 2020. While there is no solution that is 100% effective against the BTC and other cryptocurrencies scams and fraud, one layman approach should be to avoid trading websites, exchanges and platforms which appear suspicious and are not approved by regulatory authorities.