Hackers are making bank

Photo by Thought Catalog on Unsplash

We know, we know—cryptocurrency is blowing up. We’re told it’s the next gold rush, that riches are lying around and you just have to be smart enough to know how to pluck them out.

But it’s not all scooping cash out of buckets. Companies are offering ideas so half-baked they border on criminal. Then they fold in months, despite any money they’ve received from early investors, which is the Bitcoin equivalent of your brother-in-law insisting, “I’m gonna start a food truck! I just need another thousand. Can you spot me?”

Before we dive in, here’s a super-quick cryptocurrency primer — just in case you wanted to know but couldn’t ask:

  • Cryptocurrency is digital money that is not tied to any bank, government or country.
  • Bitcoin is a type of cryptocurrency, the way the American dollar is a type of regular currency. Many people think Bitcoin and cryptocurrency are one in the same, but that is simply because it was the first and is still the largest.
  • “ICO” stands for “Initial Coin Offering” and is essentially comparable to a large company going public, but instead of putting their stocks on the market, they invent their own currency and sell it to investors.

In the interest of giving you some good brunch fodder — or making you feel better about missing the investment wave — we’ve rounded up some of the biggest and baddest crypto scams thus far.

The Phishing Scam

The players: Bee Token, a home-sharing competitor to Airbnb, launched an ICO in January of this year.

What went down: Phishers acquired Bee Token followers’ email addresses and redirected $1 million of the money into phisher accounts — and they did it all in one day. The amounts deposited apparently ranged from $100,000 to $600,000 — all lost, with no recourse. Yet since the company went on to raise $10 million that actually made it into the proper place, it is still widely considered a successful ICO.

And now? Somewhere, someone — or multiple someones — sent hundreds of thousands of dollars off into the internet void and will never see it again. Somewhere, someone is enjoying those hundreds of thousands of dollars in an early retirement.

The Legit Scam

The players: PlexCorps, a US cryptocurrency management company, and the US Securities and Exchange Commission’s Cyber Unit

What went down: PlexCorps is the first company to have had charges filed against it by the US Securities and Exchange Commission’s new Cyber Unit. The company promised to give investors 13 times the returns on their investment in PlexCoin within a month. Apparently, this sounded totally doable to $15 million worth of investors’ money. The company still claims to be legitimate — after all, every investor did receive their PlexCoin. The SEC pointed out that PlexCorps has no experts and no actual plan for giving investors this level of return—and, oh, by the way, you forgot to register with the US government, so we’re freezing all your assets.

The SEC claims the money was “intended to fund [the founders’] expenses, including home-decor projects,” and the SEC has apparently seized things such as text messages and recorded Skype calls to prove wrongdoing. Paypal already reversed many transactions from the company because they were suspicious, and PlexCorps had to lie to Shopify, another payment-processing company, about what it was doing in order to keep bringing in money. Nope, not shady at all.

And now? This all happened in late 2017. This past April, the last post on their Facebook page said they still had the money and were happy to give it back, pending court orders. No word since.

The International-Villains Scam

The players: Modern Tech, a Vietnamese cryptocurrency company, launched Pincoin, a crypto specifically geared at “creating a global community,” and wound up being what may be the largest scam to date.

What went down: A team of seven Vietnamese nationals created the Pincoin currency and launched an ICO in early 2018. They worked hard at it too. They had physical company headquarters and a well-designed website, and they held conferences. At first, investors got paid out in cash. They were even offered a bonus for bringing friends on board (this doesn’t sound familiar at all). Then Modern Tech offered a second kind of cryptocurrency and started paying out Pincoin investors with that instead. This past March, all seven of them got on a plane and just peaced out of the country — never to be heard from again.

And now? $660 million dollars gone. That’s more than the GDP of most US states. For that amount of money, I suspect that plenty of people will continue to look for them — although there’s a good chance they’re chilling on a beach with some beers.

The Fake Scam

The players: Savedroid, a large German company, aims to give regular people easier access to cryptocurrency.

What went down: After their ICO in April raised $50 million, their website disappeared, and the founders posted photos of themselves drinking beer on a beach. The next day the site was back, and the owners were all “JK! But look how easy it would have been!” This is hilarious — as long as you didn’t give them any money.

And now? Investors were not amused and apparently disliked their forced education so much, the founders were tracked down via the beach pictures and issued death threats. Considering Savedroid’s main purpose, investors should take a deep breath and look at what is a very real truth — big companies can make off with your money in a snap.

Hacking Heroes Halt a Scam

The players: In July 2017, hackers got into multiple Ethereum wallets and drained them of over $31 million worth of Ether (the currency that runs the Ethereum network, an open-source computing platform).

What went down: A group of good guys saw what was happening, figured out the weakness the hackers were exploiting and realized they didn’t know how to stop it quickly enough. Instead, they hacked the rest of the accounts themselves. They basically drained the money into a safe-harbor account before the bad guys could get any more, then returned the money once the hacker loophole was closed.

And now? Millions and millions of dollars were saved — for regular people, not corporations or governments.

Hey! The Bold Italic recently launched a podcast, This Is Your Life in Silicon Valley. Check out the full season or listen to the episode below featuring Jessica Alter, founder of Tech for Campaigns. More coming soon, so stay tuned!

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The Craziest Crypto Scams Straight out of a Heist Movie was originally published in The Bold Italic on Medium, where people are continuing the conversation by highlighting and responding to this story.

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