From the Top to Collapse: 4 Cryptocurrency Frauds
- ccancino3
- Jul 17
- 3 min read
History has shown that in the world of cryptocurrencies, what goes up too fast usually drops just as fast.
The crypto-fiasco Libra, which occurred in February 2025, caused by a publication on X by Argentinean president Javier Milei, left losses of US$251 million and affected 86% of investors. This case is not isolated, as several cryptocurrencies have reached astronomical valuations only to spectacularly collapse, generating million-dollar losses. Below we present 4 Cryptocurrency Frauds.
1. BitConnect: Unsustainability in Cryptospace
BitConnect, founded by Satish Kumbhani in 2016, promised its investors guaranteed daily returns of 1% through an alleged “trading bot” based on artificial intelligence. The platform quickly gained popularity, with its cryptocurrency reaching a market capitalization of more than US $2,500 million dollars.
However, suspicions about its business model led to investigations and, in January 2018, it abruptly closed, causing its currency to lose 90% of its value in a single day. The collapse left thousands of investors bankrupt and exposed one of the largest Ponzi schemes in the crypto world: A fraudulent scheme that pays returns with new investors' money, instead of actual profits, meaning, a pyramidal system that ends up collapsing.
2. OneCoin: The Cryptocurrency That Never Was
Created by Ruja Ignatova in 2014, OneCoin was presented as the future competition to Bitcoin. With an aggressive marketing strategy, it captured the attention of investors around the world. However, unlike other cryptocurrencies, OneCoin did not have a blockchain or decentralized ledger, meaning it never really existed as a legitimate digital currency.
In 2017, government investigations revealed the fraud, and while some of its leaders were arrested, Ignatova mysteriously disappeared without a trace, taking billions of dollars with her.
3. Terra-Luna: From Peak to Ruin in an Instant
Terraform Labs, led by Do Kwon, developed the Terra ecosystem and its cryptocurrency UST in 2019, designed to maintain parity with the dollar through an arbitration mechanism with its token Luna. For months, Terra and Luna grew exponentially, reaching more than US $40 billion in market value. Nevertheless, in May 2022, UST lost its parity to the dollar, causing a domino effect that led to Luna's complete disappearance in a matter of days. This crash left a massive impact on the crypto market, with thousands of investors losing their savings.
4. FTX: Crash Collapse
FTX was one of the largest cryptocurrency exchanges (exchanges) in the world, whose founder, Sam Bankman-Fried, was considered a financial genius and the “Crypto King”. In November 2022, it was found the company used its clients' funds to finance high-risk operations through its sister firm, Alameda Research.
When investors tried to withdraw their money en masse, FTX collapsed due to the lack of liquidity, leaving losses of more than US $8 billion. In 2024, Bankman-Fried was sentenced to 25 years in jail on charges including wire fraud and conspiracy to commit money laundering.
The Safety of Gold in the Face of Crypto Volatility
Promises of easy money, lack of regulation, and extreme speculation are factors that cause fraud in the cryptocurrency field. In contrast, gold represents a safe and stable investment alternative, offering protection to investors facing the extreme volatility of the digital currency market.
Its liquidity and recognition at a global level make gold a reliable protection option against the uncertainty of the financial markets and speculative bubbles.
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