Scams, hacks, and frauds are undeniably a part of crypto and blockchain history. Such malpractices, and transactions with an illegal intent, has always been a part of any financial instrument, from cold hard cash to Bitcoin. Throughout the history of humankind, along with the evolution of our currency system, we have also witnessed the “evolution” of people waiting to prey on the misinformed and the vulnerable. If you’re new to trading in cryptocurrency, knowing these scams will definitely help you in avoiding falling victim to such schemes.
Crypto Scams: A Historical Perspective
The Twitter Scam
This scam is one of the most recent scams in this list, happening as recently as July of 2020, where hackers swindled as much as INR 89 Lakhs! The MO of this scam is pretty common, however, the scale was unprecedented. These hackers got illegal control of famous rich personalities, like Barack Obama and Bill Gates, and tweeted out “All bitcoins sent to my address below will be sent back double the amount. If you send $1,000, I will send back $2,000.”
The Physical Wallet
A hardware wallet is a physical device to store their private keys, often the size of a small USB drive. This was made for users who demanded additional layers of security and privacy which is becoming increasingly popular. There are reports of built-in vulnerabilities in some of these wallets, mostly obtained from untrusted and illicit sources. Usually, these compromised wallets have a backdoor, so to speak, allowing hackers to drain the funds in these wallets as soon as activated.
The MyCoin Pyramid Scheme
The age-old Pyramid/Ponzi scheme is also a part of the cryptocurrency history. The now-defunct cryptocurrency exchange based in Hong Kong, MyCoin, was shut down by the local authorities in February of 2015 after the investigation revealed that investors may have lost a whopping $400 million (approximately INR 64 crores as of 2015).
The investors were promised returns of as high as 150%, as long as they were able to recruit new investors into the scheme. A number of arrests were made, but it is not clear how much, if any, of the defrauded funds were returned to the victims.
The Current State
The crypto world has matured significantly since its early days. Since 2014, the Cryptocurrency Security Standard has been seen as the benchmark. However, many hacks and scams affecting the digital wallets are seemingly because these wallets didn’t comply even with CCSS level 1, which will ensure a basic level of security in crypto, according to this Deloitte study.
It is imperative for investors to do their research and choose only the most reputable exchanges and wallets, to ensure that they don’t get hacked out of their fortune.
Security at Vauld
At Vauld, we’re rather proud of our security measures for cryptocurrencies. We recognize that the biggest letdowns faced by crypto enthusiasts around the world are the sheer amount of security issues faced. These scams and scandals taint the reputation of what a mature crypto economy aims to be. It’s why we’ve taken several security measures to ensure that our platform is extremely secure.
For starters, for every single critical transaction, an MFA (multi-factor authentication) system is set up, ensuring only the registered user can transact using our app. This goes above and beyond the normal login procedure, adding an extra hardware-based verification system to ensure that you stay in charge of your crypto assets.
The BitGo Factor
Along with MFAs, we’ve also partnered with BitGo, global leaders in terms of security and compliance when it comes to wallets and crypto assets. Plus, BitGo’s wallets are insured by Lloyd’s London, ensuring the safety of the deposits in your wallet. At Vauld, we’ve always put investor protection first, from keeping you informed on the state of security in the sector, to partnering with BitGo, the most secure wallet provider globally. Rest assured, you’re in safe hands.