As is often the case with fledgling industries, decentralized finance has produced no shortage of fraud and sketchy characters. The absence of robust government regulations, the rapid evolution of DeFi technology, and amateur traders vying for quick returns all combine to create a grifter’s paradise.
With cryptocurrencies become increasingly embedded into the mainstream financial system, concerns about the potential for fraud are also coming to the fore. While it’s easy to poke fun at the absurdity of scandals involving stolen pictures of bored apes and Magic Internet Money, the real financial damage caused by crypto fraud is no laughing matter. Losses from cryptocurrency crime in 2021 amounted to $14 billion globally, according to blockchain analytics firm Chainanalysis.
Here are five recent crypto scams and scandals that show just how wrong things can go when it comes to blockchain-based finance.
1. The Bonnie and Clyde of Bitcoin
On Feb. 8, the U.S. Department of Justice announced the biggest financial seizure in the department’s history, a whopping $3.5 billion in cryptocurrency. It came alongside the arrest of New-York based, 30-something husband and wife Ilya Lichtenstein and Heather Morgan in connection with the $4.5 billion hack on the Hong-Kong cryptocurrency exchange Bitfinex in 2016.
For an alleged pair of criminal masterminds involved in a multi-billion-dollar scheme, the couple kept an unusually public profile….
