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We have known since the beginning of the ICO hype that the age of cryptocurrencies is also the age of big scams and fraudulent crypto-schemes. More often than not crypto-investments turn out to be just another scam. This online scam tsunami started with the so-called binary options in the years before the dawn of cryptocurrencies. Israeli binary options providers, in particular, cheated hundreds of thousands of investors worldwide out of billions of dollars before they were banned in most countries in 2017.

Many of these providers of fraudulent binary options have now switched to the crypto-space and use cryptocurrencies to set up their blockchain-based schemes. Crypto-investors are systematically defrauded with various approaches. ICOs, for example, are carried out without any substance by unknown operators with fake identities and fake stories and millions of naive investors are swindled. Upon completion of the ICO, the operators and the investors’ money disappear into the dark side of the web. Moreover, alleged crypto-mining systems or crypto-trading schemes are often deployed in the context of so-called multi-level marketing (MLM) to cheat investors.

A spokesman for the US Federal Trade Commission (FTC) at a Consumer Protection Workshop yesterday said that by the end of 2018 a total of up to US$ 3 billion of investor money will be vanishing into fraudulent systems. In the first two months of 2018 alone, private investors in the USA would have already lost US$ 532 million. Peter VAN VALKENBURGH, Director at the Washington Coin Center, said that there must be close cooperation between the “good” actors in the crypto-scene and the regulators to further develop the crypto-area towards investor security.

In any case, a lot of work is needed to ensure that cryptocurrencies are not just a playground for speculators, fraudsters and scam artists.

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