Unveiling The Dark Side Of Crypto’s Biggest Frauds

Crypto Chaos: $19 Billion in Hacks and Scams Exposed

Fraudsters always Find room to exploit the Crypto Industry and this is what CoinGabbar has researched and found. Welcome to our exploration of the cryptocurrency world, where innovation meets risk. Over the past 13 years, crypto has seen $19 billion in losses due to hacks, scams, and frauds. Our Journey also goes through the dramatic rise and fall of Terraform Labs, the Curve Finance debt crisis and widespread scams targeting individual users and projects like Pi Network. Join us as we uncover these stories and their implications.

Overall Research And Statistics

The overall losses due to thefts and hacks of cryptocurrencies have reached $19 billion in the 13 years since 19th June 2011. The greatest single case of crypto theft is still the Plus Token scam in 2019 whereby the attackers got $2.9 billion worth of Bitcoin through the investment in the new machines. In total, 785 cases have been detected, and the Solana Foundation has started to take action against validators engaged in sandwich attacks on traders.

Another major example is Terraform Labs ceasing operations completely and transferring the control of Terra to the community after its $4.47 billion fine imposed on Merrill Lynch by the US Securities Exchange Commission (SEC). In February 2024, hackers stole $290 million worth of tokens from the PlayDapp platform, which was the largest single crypto theft in the last two years.

DeFi Protocol Curve Finance

Curve founder repays 93 percent of the $10 million bad debt resulting from liquidation. Michael Egorov, the founder of Curve Finance, has stated that he has managed to repay 93% of $10 million in the bad debt that emanates from the soft liquidation of the protocol that occurred earlier in the day.

During a hacking attempt on June 13, Curve Finance’s soft liquidation mechanism performed a real-world test and passed it but the native CRV token lost more than 28% of its value. Egorov incurred $140 million in liquidations because he borrowed $95.7M in stablecoins against $141M in CRV across five accounts on five protocols.

Terraform Labs 

Terraform Labs is a blockchain network of Terra developed by co-founders, Do Kwon and Daniel Shin with the UST stablecoin and LUNA token with the mission to decentralize finance. The project received much attention and became one of the largest with a market capitalization of $40 billion by early 2022. However, in May 2022 an algorithm that stabilized UST at the dollar rate failed, and as a result UST and LUNA collapsed and wiped out $40 billion from investors. This event led to the downfall in the prices of other cryptocurrencies in the market as investors lost confidence. After that, the U.S. SEC accused Terraform Labs and Do Kwon of fraud, and all Terraform had was $4.47 billion in assets. The company was dissolved and required to refund its stakeholders.

Solana cracks down on validator sandwich attacks

The Solana Foundation has also acted against validators who participated in sandwich attacks, a kind of market manipulation that uses pending transactions for personal gains at the expense of retail users. These manipulative actions, which are aimed at placing buy and sell orders around the ongoing transactions to affect the prices of the assets, have caused the permanent removal of the violators from the delegation program of Solana. This crackdown further cements Solana’s dedication to user protection as well as the reliability of its network. Solana known for its significant number of users and the prospects for its development, does not cease to work on protecting its audience from fraudsters and hackers.

Other Scams That Have Shaken the Crypto Land

Pi Network, which gained popularity before launching its mainnet is now embroiled in controversy due to fraud and scams. Reports reveal that users attempting to exchange Pi Coin have fallen prey to fraudulent schemes on Social sites. Since Pi Network is still in its closed mainnet phase, these transactions can't occur on official exchanges. As the Pi Network plans to go live on 28th June, increasing scams are causing skepticism and fear among investors.

A Chinese trader, known as CryptoNakamao, lost $1 million to a hacking scam involving a fake Google Chrome plugin called Aggr. This plugin stole his browser cookies, enabling hackers to bypass security measures and manipulate trades on Binance. It highlights the urgent need for stronger security protocols and vigilance from both traders and platforms to prevent such scams.

A fraudulent cryptocurrency exchange, Quantum AI has used a deepfake video of Elon Musk to falsely endorse their AI-based crypto trading services, leading to a warning from the Hong Kong Securities and Futures Commission (HKSFC). The scam included a fake news website and misleading ads. Additionally, over 35 YouTube channels live-streamed deepfake videos of Musk during a SpaceX launch, promising doubled crypto returns and deceiving viewers. 

Also Read: Major Breakthrough In Ronin Bridge Case, Recovers $5.7M