It has been tempting to take advantage of the volatile crypto market and the complex nature of blockchain technology.
Nothing lasts forever — and that includes cryptocurrencies.
A recent study found that the number of so-called “dead” cryptocurrencies has surged over the last two years.
Since February 2020, roughly 1,000 cryptocurrencies have been pronounced dead, or no longer in circulation, according to Traders of Crypto, with the total death count standing at about 2,400 coins, making for an increase of about 71%.
Is There Life After Crypto?
The group said that a cryptocurrency can be considered “dead” when its trade volume falls below $1,000 for the past three months; when its website is taken down; or if developers abandon the project.
“These ex-cryptos will have died for a wide variety of reasons,” the group said. “Sometimes, the cryptocurrency simply becomes outdated, with the developers unable to keep up with the rapid pace of change in the blockchain space, while other coins simply fail to attract enough investors to create a sufficient amount of buzz and community to keep the project going.”
Scams Are Also Running Wild
However, the group warned that a sizable portion of these dead coins are the result of scams and scam coins, which take advantage of the volatile crypto market and the complex nature of blockchain technology.
Crypto scans can range from scam ICOs, where money is raised for a non-existent cryptocurrency project, to “pump and dump” schemes, when the majority of owners of a coin hype up demand for the currency to inflate its value before selling at an artificially high price.
Another crypto scam includes the simple theft of digital currency by either hacking investors’ crypto wallets or setting up fake wallets or exchanges to steal people’s money, the group said.
The Biggest Ponzi of All
“The classic Ponzi scheme has also made a comeback,” the report said, “taking advantage of the unregulated market and people’s difficulty keeping up with developments in the crypto and blockchain space.”
Traders of Crypto said they named OneCoin, a classic example of a Ponzi scheme in the crypto world, as the biggest scam coin in crypto history.
Between 2014 and 2016, OneCoin attracted over $4 billion in investments and purchases. But OneCoin Exchange, the only way of cashing out from the investment, shut down in January 2017.
‘Classic Crypto Scheme’
OneCoin’s founder, Ruja Ignatova, went into hiding in 2017, while her co-founder Sebastian Greenwood was arrested in 2018 and is currently incarcerated in the U.S.
Ruja’s brother, Konstantin Ignatova, took over the business in her absence and has since also been arrested, pleading guilty to fraud and money laundering.
BitConnect was another huge pyramid scheme, the group said. Founded in 2016, prices peaked in December 2017 and BitConnect became one of CoinMarketCap’s best-performing coins of 2017.
The founders pulled out a short time later and in September 2021, U.S. regulators sued BitConnect and its founder, Satish Kumbhani, for a $2 billion fraud.
Kumbhani’s whereabouts are unknown, though he was believed to have been operating out of India at the time of the fraudulent activity.
The Squid Scam
The Squid Game crypto scam is one of the highest-profile scams in recent years, Traders of Crypto said.
The Squid token was supposedly part of a play-to-earn game modeled on the popular South Korean hit Netflix show “Squid Game,” but in fact had no ties to the series at all.
As Squid’s value continued to rise, increasing by 45,000% to a peak of $2,856. But users found that they were unable to cash out and had to buy “marbles” to play a game that would allow them to earn their money back.
The owners pulled the rug out from under the project, the value of Squid collapsed and investors were left with virtually nothing, the report said.
“[Meanwhile] someone somewhere made a tidy profit of approximately $3.38 million,” Traders of Crypto said.
