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Inside the cryptocurrency scam vortex



On May 22nd, a crypto funding project called DeFi100 posted a message on its website: “We cheated on you and there is nothing you can do about it. HAHA. All of you Moonbois have been betrayed and there is nothing you can do about it. ”

Screenshots of the message immediately went viral on crypto Twitter (always anarchic, slightly ridiculous). A popular anonymous crypto tracking Twitter account called Mr. Whale estimated that DeFi100 ran away with $ 32 million. News agencies for cryptocurrencies as well as Yahoo Finance ran with the number. The project owners denied any foul play, and it soon became clear that the news was more of a website hack than a serious warning – but by then it was too late. Panic had set in and the price of the underlying coin was in free fall.

“We never stole funds,” a project representative told The Verge. “DeFi100 was a very small project and we didn’t hold funds from investors so there is no question of cheating people or running away with their money.”

There is little recourse if crypto investments are found to be fraudulent

DeFi100’s problems are a small part of the picture, but they are reminiscent of the dangers of the ongoing crypto boom. Although billions of dollars have been poured into this area over the past few months, there is still little chance if investments turn out to be fraudulent. Most importantly, the radical decentralization of the blockchain means there is simply no way to get your money back – and there are few assurances that an unproven provider will keep its promises once the transaction is complete. The result is a new gold rush in crypto scams as speculators seek increasingly obscure opportunities and riskier bets.

The DeFi100 project website is now back online, but rumors linger about what actually happened. Certik, a popular blockchain security leaderboard, is currently listing DeFi100 as a “rug pull,” which is a term for a scam in which the founders of a project collect and execute investment funds. (The project owners say a rug pull would be impossible as they never held investor funds.) It’s just one of a number of scams that today’s crypto holders have to watch out for, along with sketchy altcoins, Discord pump-and-dumps, Elon Musk impersonators and other malicious forms of cybercrime.

According to Maren Altman, a TikTok influencer with over a million followers who creates videos on cryptocurrency and astrology, there are three types of risks crypto owners should be wary of: bad investments, collapsing projects, and outright scams.

Subreddits like r / cryptocurrency are inundated with allegations of “fraudulent coins”

The first and most common type of risk are simple bad investments in obscure coins. Outside of big players like Bitcoin and Ethereum, there are thousands of smaller coins based on blockchain technology that promise huge rewards if the coin ever gains importance. Subreddits like r / cryptocurrency are inundated with allegations of “fraudulent coins”.

“I mean, I’m in a handful of those where it’s all about investment, it was a promise, development is ongoing and I’m still waiting,” she said.

Trying to research obscure altcoins can be confusing for inexperienced traders. Links to Discord servers for cryptocurrencies often pop up on Twitter, promising a simple pump-and-dump of a smaller crypto coin. Or, even more confusing, Twitter bots accuse Discord servers, which don’t exist, of pump-and-dumps in hopes of adding value for a separate coin. But while they promise easy money, the reality is less tempting.

Another risk is the often innocent but unfortunate mismanagement of funds. In a bullish crypto market everyone thinks they have a revolutionary idea with cryptocurrency. And of course, many of them don’t work out.

“Unresolved issues, contract errors or just a weak link in the development circle,” said Altman, “which leads to mismanagement of money and unpredictable investment by people.”

A very well-known example of this was the DAO project. It started with a lot of noise in the spring of 2016, only to be completely discontinued in the autumn of the same year. The project was launched by the Decentralized Autonomous Organization and was an attempt to build a venture capital fund on the Ethereum blockchain. Just a month or two later, a hacker found a vulnerability in the token’s code and ran away with $ 50 million. Traders started selling DAO tokens en masse, and the price never recovered.

Sometimes this mess can end in downright fraud. According to the Federal Trade Commission, crypto-based financial fraud is at an all-time high thanks to increasing interest in cryptocurrencies. And the line between a well-intentioned mistake and the crypto-Ponzi scheme is blurred. Just ask investors from OneCoin or PayCoin.

In 2019, PayCoin founder Homero Joshua Garza was sentenced to 21 months in prison

OneCoin was launched in the mid-2010s and billed as an educational crypto trading service. It turned out that the OneCoin tokens bought by investors weren’t actually on the blockchain. It was accused of being a Ponzi scheme and its founders ran away with nearly $ 4 billion. It has been dubbed one of the greatest financial fraud cases in history. One of its founders, Ruja Ignatova, is still missing.

In 2019, PayCoin founder Homero Joshua Garza was sentenced to 21 months in prison and sentenced to restitution after creating his own cryptocurrency and offering it to investors with assurances that he had secured a capital reserve of $ 100 million. There were no reserves, and the entire project ended up losing $ 9 million.

But even with the significant drop in the value of large coins like Bitcoin and Ethereum in May 2021, cryptocurrency is more popular than ever, and legions of inexperienced traders are learning the hard way what a peer-to-peer financial service actually means.

Neeraj Agrawal, director of communications for Coin Center, one of the largest cryptocurrency stakeholders in the United States, told The Verge that wildly speculative coins (colloquially known as “shitcoins”) are now an integral part of the cryptocurrency space.

“The insane speculative rubbish coins will not go away,” says Agrawal. “It’s just part of the world now. And it remains for us, so to speak, to show that the really good projects are worth their existence, that there really is value here. “

That’s especially difficult when crypto celebrities like Elon Musk turn interest into the crazier end of the crypto space. Musk recently fueled the massive surge in interest in Dogecoin, a failed crypto coin invented as a hoax and named after the famous Shiba Inu meme. Musk’s tweets were also blamed for this month’s massive market downturn. It’s still unclear what impact Musk is having on the market, but his recent branding as the main character of crypto has resulted in a litany of Musk-themed scams. According to the FTC, people posing as Musk scammed at least $ 2 million from traders this year.

“A market really only needs two things … a seller and a buyer.”

“Perhaps that’s the biggest risk facing crypto users – your own stupidity,” joked Meltem Demirors, chief strategy officer at digital asset investment firm CoinShares. “I think people are just not used to taking responsibility for their financial lives.”

In fact, this month I was asked by both a family member and a close friend about an obscure cryptocurrency called Dogelon Mars. It’s currently worth $ 0.00000016, but the two people I was close to were considering buying a bunch of it because they mistakenly believed that based on the name and frankly confusing description, it was one of Musk’s own launches Coin trades.

Demirors told The Verge that Dogelon Mars was actually one of their favorite meme coins. “We need to remember that the whole point of a lot of things is license-free financial innovation,” she says. “And a market really only needs two things. It takes a seller and a buyer. “

She said this was the main explanation for the recent NFT explosion. People had crypto coins on hand and wanted to see what they could spend them on. It turned out they were looking to buy surreal internet art for millions of dollars.

“I always find it very funny when people are all about crypto and permissionless financial innovation, but the moment they lose money they become the most statist people imaginable,” Demirors said. “You really can’t have both. Like you bought this shitcoin. You have to make your bed now and lie in it. “


Combining Cryptocurrency and Social Responsibility



Much of the cryptocurrency discourse has focused on utility, functionality, capitalization, and technology. But basically, this perspective misses one of the essential elements for the success of any network: the people.

Blockchain projects strive to decentralize and democratize services. Although this ambition indirectly promotes social well-being, despite the industry’s stance on improving inclusivity, it was never the focus.

This reality is slowly changing as more and more projects take a bird’s eye view of the industry and its environmental or social footprint. GoodDollar is one of those organizations that take social responsibility by bringing cryptocurrencies to the conversation in a sustainable format.

As a Universal Basic Income Project (UBI), GoodDollar has two goals: to provide educational opportunities for users to learn about crypto, and to empower individuals through its crypto-based income distribution framework. By making it easier to interact with cryptocurrency at an elementary level, GoodDollar hopes to improve financial literacy and teach people how to use cryptocurrency. UBI means giving a fixed amount of money to every adult on a regular basis.

Conceived by eToro CEO Yoni Assia as part of the organization’s Corporate Social Responsibility (CSR) goals, GoodDollar has readily demonstrated the power of blockchain to drive meaningful change in a nonprofit format. With its proven model, the attractiveness of GoodDollar grows. It now offers support from crypto enthusiasts and entrepreneurs as well as corporate partners who also accept GoodDollar as a form of payment. (See Bitcoin Stock Comparison on TipRanks)

Corporate support for UBI Climbs

The latest brand to join the G $ initiative is This e-commerce bridge helps consumers spend cryptocurrencies in key global online retail hubs, including Amazon, eBay, and Walmart. donated $ 50,000 to GoodDollar, all of which will be minted in G $, to support GoodDollar’s UBI recipients.

The story goes on

In exchange, G $ can be spent at to purchase basic household items and emergency supplies from the e-commerce sites mentioned above. This helps forge a synergistic relationship between the two organizations, especially as becomes well known in the eToro and GoodDollar communities while improving the fungibility of G $.

In addition to the social good that the e-commerce onboarding and fulfillment brand is promoting through their contribution, it is expanding the appeal of crypto by applying its use case to millions of consumers around the world. Arbel Arif, CEO and Founder of, sums it up: “We loved the performance of GoodDollar and wanted to help in every possible way.”

As blockchain adds value across industries, sustainability and social well-being are two areas where the impact of technology is really being felt by billions of people around the world who can benefit most from a more balanced economic environment.

Disclosure: Reuben Jackson did not have a position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be construed as an invitation to buy or sell any security.

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crypto investment: Cryptocurrency investing is risky but can reward: Risks to know, how to make the most of the opportunity



Until about two months ago, Noida-based Gaurav Tyagi thought Elon Musk was a visionary who would lead the world into a technology-based and financially secure future. But not anymore. After Musk announced that his company would no longer accept bitcoins for buying Tesla cars and expressed concern about the environmental impact of bitcoin mining, the crypto market collapsed in mid-May.

It was a midsummer nightmare for investors like Tyagi. Within a week of May 13, the value of its crypto holdings plummeted more than 60% from around 55,000 rupees to less than 20,000 rupees as panicked investors quickly sold their coins. “Elon Musk acted irresponsibly without caring about the millions of investors who would be affected by such decisions,” he says sullenly.

Did you know already?

  • $ 1,635 billion is the estimated market capitalization of all cryptocurrencies. Bitcoin’s market capitalization of $ 674 billion (50.57.561 billion rupees) is more than three times that of India’s most valuable company, Reliance Industries (market capitalization 11.14.500 billion rupees).
  • Rs 1,000-1,500 crore is the combined daily turnover of crypto trading in India. This is less than 1% of the daily trading volume of Rs 2,00,000 crore on stock exchanges in India.
  • 10-12 million is the estimated number of active investors and traders of cryptos in India. That is 16-20% of the 60 million active stock investors and traders in the country.
  • The 24×7 trading takes place on the cryptocurrency market. The market is also open on Sundays and Holidays, unlike the stock and bond markets in India, which open at 9 a.m. and close at 3:30 p.m. and close on weekends.
  • 40-50% was the drop in crypto prices after Elon Musk tweeted that Tesla won’t accept payments in bitcoins and expressed concern about the environmental impact of crypto mining.

Tesla’s U-turn on cryptos wasn’t the only trigger. Around the same time, the Chinese government took action against institutions dealing with cryptocurrencies. These two developments sparked panic selling in cryptos. “Aside from panic selling, many investors decided at this point to post profits, which led to a more pronounced decline in crypto prices,” said Nischal Shetty, CEO and founder of WazirX, a crypto exchange founded in 2018.

Also read:
Why this crypto market correction is healthy

Crypto prices have risen over the past 12 months and have brought investors incredible returns. Even after the recent drop, the price of a Bitcoin is close to 400% last year. Some smaller coins like the Dogecoin are trading 140 times their June 2020 level, while Matic Network is up over 7000%.

Most searched cryptocurrencies
These 10 cryptocurrencies are among the most traded coins. Find out what drives them.


Data from June 8th, 2021 | Sources:, Binance

Lured by high returns
These enormous returns have drawn investors to what crypto evangelists are calling an emerging asset class. There are nearly 12-15 crypto exchanges in India and daily trading volume estimates range from Rs 500 crore to Rs 1,500 crore. As big as it sounds, this is less than 1% of the daily turnover of Rs 2,00,000 crore on the stock exchanges in India.

Shetty admits that daily sales are small, but points out that the number of investors is far larger. He estimates that there are more than 10-12 million active investors trading cryptocurrencies on the dozen crypto exchanges in India, accounting for about 16-20% of the estimated 60 million active stock investors.

These numbers suggest that the average crypto investor isn’t very deep in their pockets. Still, he can trade as cryptos can be bought and sold in fractions. A Bitcoin costs close to Rs 27 lakh and Ethereums cost Rs 2 lakh. But you can buy a fraction of these coins at Rs 50-100.

Such rules have made crypto trading easy and spawned a new generation of traders with traits that traditional investors would disapprove of. These investors are young, easily influenced by social media and ready to take high risks. Your impatience to get rich has shortened your investment horizon. “I want to invest for the long term,” says a seemingly astute 26-year-old Vikram Chaddha. Then he adds, “I can last 2-3 months.”

The trading hours of the crypto market add to the craziness. The exchanges are open 24 hours a day, seven days a week. No holidays, no weekends. You can act day and night. As one stock trader joked: “Now we can lose money on the weekend too.”

Meet Rajesh Rupala, a 31-year-old investor based in Bhavnagar, Gujarat who left a bank job last October to transform himself into a full-time stock trader. He was introduced to cryptos four months ago and was instantly hooked. Rupala has invested almost Rs 12 lakh (25% of its total investment portfolio) in this very risky but also rewarding option.

Facing multiple risks
Investors like Rupala don’t mind that cryptocurrencies are exposed to multiple risks. On the one hand, there is the systemic risk. Cryptos are very volatile instruments and can move very quickly and without warning.

“A second level of risk arises from regulatory ambiguity, cybersecurity threats, and uncertainty about their acceptance in mainstream finance,” said Pableen Bajpai, founder of FinFix Research and Analytics. Three years ago, RBI practically banned cryptos when it asked banks and fintech companies to discontinue their services for companies that trade virtual currencies. But last year the Supreme Court lifted the RBI’s ban, saying that cryptos are unregulated but not illegal.

That hardly calms you down. If a stock investor has a complaint against a company or an intermediary, he can contact the Sebi and the complaint will be dealt with in accordance with the codified rules. But since there are no regulations governing cryptos, the investor will likely have to go to the cybercrime cell or move a court. “That’s why regulation is important. There is self-regulation going on at the industry level right now, but we want the government to set the rules and appoint a regulator, ”Shetty says.

Crypto investors are also at risk from unscrupulous promoters and shady outfits. It’s a landscape full of stories of scams and scams. “Given the lack of credible information and reliance on social media, there is a very high risk of price manipulation,” said Gaurav Garg, research director at CapitalVia Global Research.

Tampering is also possible as many cryptos are not very common. “There is a concentration risk when a few investors hold very large amounts of a particular coin,” says Vineet Nanda, co-founder of Globalize. As the May crash demonstrated, there is a high risk of price manipulation if a tweet can lower the price by 40-50%.

Too big to switch off
Many investors find solace in the numbers. The crypto industry has gotten gigantic in recent years. Bitcoin’s market capitalization alone exceeds Rs 50 lakh crore, which is higher than the combined market capitalization of the six largest stocks in India, including Reliance Industries, TCS, HDFC Bank, Infosys Technologies, Hindustan Unilever and HDFC. Ethereum’s market capitalization is equal to the next six stocks. So the two largest cryptos are bigger than the 12 largest stocks in India. “How can a government shut down something that has attracted so much investment,” asks Arun Shivshankar, a 22-year-old medical student from Vellore. Shivshaker tries out cryptos after graduating from college.

The actors of the crypto ecosystem are also confident that the government will not ban virtual currencies. In fact, the government plans to create its own sovereign digital currency. “Nobody thinks of banning them because it is practically impossible. The other reason is that the technique is actually good. It’s so beautiful that in the future it will find a way to grow. And if that happens and a nation doesn’t belong, it will simply lose, ”says Vikram Subburaj, CEO & Co-Founder of Giottus Cryptocurrency Exchange.

Cryptocurrencies are risky, but if you are careful and understand the market they can be very rewarding too.

Also read:
Seven Rules of Cryptocurrency Trading for New Investors

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Crypto Long & Short: The Market Gets Smarter



I find it useful to think about risk in cryptocurrencies in three dimensions: market, technology and regulation. Like dimensions in space and time, they do not exist independently; they overlap.

  • The market risk dimension is the acceptance risk that any new technology is faced with. It’s less represented by cryptocurrency critics than by people who just don’t care.
  • The technology risk dimension is the risk that the underlying technology will break. This is perhaps the most often overlooked. How many can say they understand why Bitcoin’s SHA-256 hash function is unbreakable?
  • The regulatory risk dimension receives the most attention, but its nuances are often poorly understood. Those nuances – and the slow progress of the market in capturing them – could be seen in this week’s news cycles.

This week it was all about regulatory and technological risks. It was amusing to see commentators switching from centralizing bitcoin mining in China to wrestling over the Chinese government crackdown on bitcoin mining.

This column originally appeared in Crypto Long & Short, CoinDesk Research’s weekly newsletter for professional investors.

Both risks are overemphasized. In addition to validation, mining is Bitcoin’s system of governance. And Bitcoin turns governance into a commodity: it takes the corrupting power of governance and turns it into a “toothless commodity” that anyone with an internet connection can deliver. The only advantages in this race are cheaper power and faster processors. North American miners have shown that they can compete on both fronts.

Right now, any Chinese crackdown on cryptocurrency mining is the digital golden opportunity for North American miners. And if Senator Elizabeth Warren’s comments reflect Washington’s intentions regarding North American mining, this will be someone else’s opportunity. (A Paraguayan lawmaker made friendly regulatory proposals this week. Paraguay controls 45% of the capacity of the world’s second largest hydropower plant and uses very little of it.)

This week, the cryptocurrency markets showed a more sophisticated understanding of regulatory and technological risk: They shook off the mine thunder from Washington and Beijing and marveled at the news that the U.S. Federal Police had found a way to seize Bitcoin from Darkside, the criminal collective that held the systems of Colonial Pipeline for ransom.

It was the largest such seizure to date by a single (presumably) highly developed organization. Had the FBI cracked Bitcoin’s cryptography? The market reacted as if it had. A three-letter agency that finds a way to solve tough problems in cryptography would actually shut down Bitcoin and all cryptocurrencies (among others). But that didn’t happen.

Hours after it became known that Bitcoin had been salvaged from the Colonial Pipeline attackers, the FBI was named in a press release from Europol describing a multinational operation in which law enforcement agencies set up an encrypted messaging service and used it as a Trojan horse to criminals marketed. Inexplicably, these masters of deception seem to have entrusted their private Bitcoin keys to this stool pigeon.

The increasingly crypto-curious world needs to learn a thing or two about how this works. The New York Times and Wall Street Journal ran reports this week stating that Bitcoin was “indeed traceable” and cited “cryptocurrency’s reputation as difficult to track.” Law enforcement agencies have long understood that crypto is not only traceable, it is permanently traceable. Some quirky federal agencies have called Bitcoin “prosecution futures,” noted journalist Nathaniel Popper in his 2016 book, Digital Gold.

The difference between the US government cracking SHA-256 (which created it) and setting up a sting through an off-chain service provider perfectly shows where the regulatory risk really is with cryptocurrencies. The market’s reaction to the seizure news – and its non-reaction to a midweek drop in Bitcoin hashrate or the (sometimes false) news about Bitcoin bans in two Chinese provinces (Qinghai and Yunnan) – shows a better understanding of this distinction.

Washington and Beijing would find it difficult to stop Bitcoin mining, at least to enact it directly. As long as “Bitcoin is running” on at least one computer, Bitcoin will run. As the price of Bitcoin rises, more miners will step in, motivated by rewards and providing security commensurate with the value of the network. Clogs the entrance to their den and the honey badger is spotted in another part of the forest.

A greater regulatory risk lies in the government’s power to control crypto exchanges and other off-chain service providers. Crypto’s strange, fragmented liquidity performed admirably on May 19th. That may not be the case on the next drawdown, depending on how the exchanges are regulated. There is also a risk of slow advances in crypto-friendly regulation, such as banking supervision and Bitcoin ETF approval.

It’s not that mining is sacrosanct. Regulatory risks at the entrances and exits can have a negative impact on mining by depressing the price. It is important to distinguish between this and a regulatory risk that affects the security of Bitcoin itself.

The market seems to understand this distinction – between technology risk and regulatory risk in cryptocurrencies – better. At least for the time being, this is a sign of increased efficiency. In alternating between retail and institutional market cycles, this dynamic could change quickly.

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