The Nigerian crypto online space has been commonly associated with wealth. Therefore, many people think or have heard that cryptocurrencies are a new and easy method of earning as much as a million naira in a short amount of time. This information is false because cryptocurrencies are not a method of making money but are money itself.
However, scammers around the world have taken advantage of this common mistake to give offers of unrealistic profits to a person who "invests" in their low-quality fake business platforms, systems or tokens.
This is how, for example, they managed to raise, in 2019 alone, at least 1.6 Trillion NGN among fraudulent ICOs (Initial Offer of Coins) as well as a phishing URL link (via a text message, email or website) that they could use to steal personal data or details, fake mobile phone apps, investment offers and, above all, pyramid scheme service.
Of course, there have been different types of scams over the years. Some were more successful than others. There are Nigerian or Spanish bitcoin scammers, for example, who managed to make fortunes.
Some became billionaires by invading peoples' mobile phones and online privacy using a phishing URL link, thereby stealing sensitive data and funds.
Notable Cryptocurrency Scams Around the World
Although the world of cryptocurrency is relatively new and quite unregulated, it offers some form of privacy from the government. It is not surprising that the government of most countries, including Nigeria, placed a ban on cryptocurrency trade or use.
On the 5th of February 2021, the Central Bank of Nigeria (CBN) ordered all Nigerian banks and any other financial service provider to stop facilitating crypto transactions and desist from transacting with business entities engaging in crypto or their respective service provider.
With the CBN ban, any bank account found to be used for any crypto-related transaction will be closed almost immediately as instructed by the government.
The Central Bank of Nigeria (CBN) claims that crypto has been used to facilitate several illegal deals due to its anonymous nature, and the move is for the benefits and protection of the Nigerian financial system and well-meaning Nigerians from becoming victims of any bitcoin scam or crypto-related scam.
To ensure that you have the privacy and safest possible journey in the cryptocurrency world, I am here to tell you about some famous online cryptocurrency scams or schemes that have happened in history.
This will help you understand how easy it is to become a victim of any online crypto or bitcoin scam in Nigeria and how to avoid it.
However, not all unsuccessful cryptocurrency or project is a scam. Even if it is invested via a formal encrypted token, investors may also suffer losses if it fails due to natural reasons.
Below, I bring you details of some of the notable bitcoin and other online cryptocurrency scams in history.
Modern Tech (Pincoin and iFan)
This company was introduced in Vietnam as a representative of two Initial Currency Offerings (ICOs). In them, the Pincoin and iFan tokens would be sold. The first was an offer for an investment opportunity with (inexplicable) monthly returns of up to 40%. The second gave an offer to feed a new social network for artists.
With this facade, Modern Tech was structured like a pyramid scheme. Older and more senior investors benefited the most in the fraud, as new ones paid their interest.
To join the platform, each new person was required to "invest" a minimum of 560,000 NGN in the tokens, Pincoin and iFan. However, in reality, they have never been worth so much.
By 2018, they paid none of the promised profits. Modern Tech deleted all of its social networks and never showed up in its supposed offices. The defrauded investors could do nothing but protest at one of the company's false addresses.
Furthermore, they reported the case to government authorities. In short, 32,000 people lost about 270 Billion NGN, and if your guess is as good as ours, you already know the fate of the victims. They may never get their bitcoin or money back. Those responsible for the fraud are yet to be captured.
Plus Token
Arguably, this infamous platform was the biggest and one of the top cryptocurrency scams of 2019. Asian in origin, with a strong presence in China, South Korea and Japan, it's very similar to Vietnam's Modern Tech.
Their main offer was the Plus Token. This supposed digital asset would return to investors between 9% and 20% per month.
Perhaps one of the main reasons for Plus Token's success was that this scam, rather than publicizing its fraudulent product in the media, preferred to promote personal meetings and events.
In these meetings, the scammers had the opportunity to talk face to face with potential investors. That way, they were able to convince people and groups.
In addition, they also offered the supposed "investment" through chat rooms and physical advertising in public places, such as supermarkets. Members of the scheme explained that the alleged profits were due to trading in cryptocurrencies and mining.
In reality, Plus Token has always been a crypto-financial pyramid scheme with no product at all. The money of new members falls directly into the accounts of senior investors or managers.
In late June 2019, users began having problems withdrawing their funds. Soon after, the crypto service provider blamed the alleged miners. Finally, they didn't bother to make more excuses and disappeared with about 1.3 trillion NGN from over 3 million victims.
Much of what was defrauded in cryptocurrencies still haunts the network: Bitcoin, Ethereum, EOS and OmiseGo. The final transaction of parts of these cryptos brought the note "Sorry, we have to run".
Blockchain tracking company and service provider, Chainalysis even provided evidence pointing to these scammers and their large OTC trading volume on exchanges - such as Huobi - as to blame for the crypto price drop in 2019. At least six members of the coup team were arrested and punished according to the law.
OneCoin
This is perhaps the queen among the top crypto coin online scams to date. It is a global Bitcoin financial pyramid scheme. A longstanding fraud that has had a strong presence in the Spanish region.
As they explain, OneCoin is a cryptocurrency with a private blockchain and a platform to learn about the crypto universe. OneLife, OneAcademy and OneWorldFoundation are part of the same scheme.
For a period, various "education packages" ranging from 45 Billion NGN to 22 Billion NGN were offered through OneLife and OneAcademy. OneWorldFoundation is a children's charity that accepts donations through OneCoins, PayPal, wire transfer, and credit/debit cards.
In previous years, these supposed educational packages – with material plagiarized from various sources – included tokens that could be used to "mine" OneCoin. Mining, however, doesn't even work that way.
Additionally, Spanish users were rewarded with these tokens for promoting the platform.
These "onecoins" were never listed on any exchange. Furthermore, the only way to turn them into fiat currency was on OneCoin's own exchange, intended for members only. Of course, that was until 2017, when the exchange closed without warning.
In the same year, Ruja Ignatova, the leader behind the scheme, disappeared without a trace. Since 2016, it has been the target of complaints in several countries. As a result, her brother Konstantin Ignatov took over the business. That's when the launch of a OneCoin ICO was promised.
Konstantin Ignatov was arrested in March 2019 in Los Angeles. Unfortunately, Ruja Ignatova is still missing. OneLife's website service and social networks are still in operation. Therefore, they should be avoided.
BitConnect
It can be said that the BitConnect (BCC) case is a little different from the other major bitcoin or cryptocurrency scams in this matter. This is because the scheme was, in fact, a decentralized cryptocurrency. Decentralized criteria depend mainly on trust.
The BCC, in this sense, managed to raise a lot in the list of cryptocurrencies by market capitalization. This is since its launch in 2016.
Its main offer was a lending platform at BCC. In it, 40% of profits could be made with borrowed funds. Also, up to 1%, a day could be earned from stakes alone.
There was also another percentage for each referral included in the system. This pyramid scheme hidden behind a digital currency has achieved overwhelming success. That's because when the cryptocurrency market was created, it was full of inexperienced and enthusiastic investors.
The price per token peaked at 224,000 NGN, while its capitalization surpassed 861 Billion NGN in January 2018. But that would be the beginning of the end. That month, the Texas State Securities Board (a body similar to the Securities and Exchange Commission, Nigeria) issued an order to close BitConnect.
The agency claimed it was just a pyramid scheme deceiving its investors. A few days later, on January 17, 2018, the BitConnect team (which remained anonymous) decided to shut down its lending platform. The price of the token plummeted for this reason.
It was an "every man for himself" scenario. Every person who owned the cryptocurrency began to sell it en masse to avoid further loss. Therefore, it is difficult to know how much was lost due to this financial pyramid scheme with cryptocurrencies.
Warning Signs to Look Out For
We can always fight against fraud, as they are just disappointments for the less informed. Therefore, it is necessary to educate yourself as much as possible about the crypto universe and the specific code of conduct that guarantee success.
In addition, it is important to consider the warning signs that are usually present in all of these situations.
First, they all ask for "investment" and are never used to informing people about the risk of loss. All legit investments have some degree of risk; none are exempted. So if someone mentions that your investment will be 100% risk-free and with guaranteed payouts, beware. The intention likely is to commit some kind of scam.
Another essential factor to consider is how the platforms of these major cryptocurrency scams work. Where and how do you get back your money or profit? Can you prove they took your money? Do they charge any fee?
Withdrawals are also part of this. If, when trying to withdraw, you receive messages such as "technical faults" for a long time, requests for "taxes", or any other excuse, you can be sure it is fraud.
It would also be best to look at the team that runs the platform. Are the members shown on the official website real people? And if so, do they have some kind of criminal record? Research and financial education are essential to avoid scams. Not all that glitters is gold.
In conclusion, this guide covers the most common Bitcoin scams in the cryptocurrency world. You should note that online fraudsters are very clever and will always try to find new ways to scam unsuspecting investors.
A crypto scammer could use cryptocurrency fake news, a fake website, phishing link or URL, fake text messages or emails to steal personal information or data such as your crypto account details that could result in the loss of your money. Ensure you keep your email and personal data related to your crypto wallet safe and secure
Our advice is to always take your time to do research, double-check, listen to the community, and not invest with emotions. Following this code of conduct should keep most users out of any serious trouble or prevent them from falling victim to any crypto trader scam in Nigeria.
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