The big cryptocurrency scams of 2021
The past 2021 was a big year for cryptocurrencies. The most popular ones - such as Bitcoin, Ethereum, and Dogecoin - experienced a favorable period that started with a boom fueled by platforms like Reddit in January. That caused many cryptocurrencies to reach new highs, attracting the attention of many new users who were previously unfamiliar with the sector. The problem is that cryptocurrencies are unpredictable; it remains an incredibly volatile market, with few regulations yet. In addition, the arrival of so many neophytes has attracted fraudsters who have begun to prepare traps to trick potential victims and take advantage. Here are some of the most notable ones:
Squid Game tokens.
It was one of the most publicized scams of the year. In a matter of weeks, a token based on the popular Netflix series, Squid Game, went from being worth a handful of dollars to nearly $3,000, spurred by news stories appearing in the media. CNBC, Forbes, Business Insider, and others ran headlines highlighting the name and the steady rise in the currency's value. However, there was cause for alarm from the start. Right off the bat, the cryptocurrency creators had no authority to use the Squid Game brand, and people who invested in the token were quick to complain that they couldn't sell what they had bought.
Not coincidentally, the scam had been designed that way: the creators of the Squid Game token had created an anti-sale mechanism in their cryptocurrency. But unfortunately, that mechanism didn't block everyone; it was designed to dump all the money into a few accounts, leaving the users with losses. And the media coverage that Squid Game tokens received led to many users losing their investment.
Fake press releases
In 2020 the trend had been the appearance of fake tweets about cryptocurrencies through an alleged Elon Musk account, in which he pushed some new memecoin or ponzi scheme. In 2021 the same system was employed with false press releases: several documents appeared claiming that major trading players would accept specific alternative cryptocurrencies throughout the year. False information that was spread by some media outlets. Thus, prices suddenly rose with the news and plummeted again once the companies denied the report. As a result, the scam organizers made a quick profit.
Poly Network hacking
Over the summer, a hacker discovered a flaw in the decentralized financial platform Poly Network, allowing him to transfer more than $600 million to his account. However, it probably would have been difficult to disappear with a haul of that size, so in the weeks that followed, the hacker contacted Poly Network and claimed that he had always intended to return the money. Poly Network played along, even referring to the hacker as a 'White Hat,' a nod to the term describing an ethical hacker who tries to expose security flaws so they can be fixed before the criminals show up.
In the end, the hacker transferred most of the cryptocurrency funds to the platform. That let him off the hook for any possible repercussions for theft, and Poly Network offered him a $500,000 reward.
Africrypt scam
Raees and Ameer Cajee, two brothers, ran a Bitcoin investment company out of South Africa called Africrypt. Both disappeared, along with all of their investors' cryptocurrencies. In April 2021, the Cajeees claimed that their company had been hacked and that all of their clients' accounts had been compromised. However, the story was quickly dismantled, and investors pointed the finger at the Cajees as the culprits. Lawyers representing the investors estimate that the brothers had stolen an amount approaching $3.6 billion. That would make it the most significant cryptocurrency theft to date, although the exact figure is unknown. Africrypt investors have banded together and have been working to recover their funds.