The most recent case is the one that occurred in China, where 1,100 people were arrested across the country on Wednesday for being linked to a network of “fraudulent activities” related to cryptocurrencies.
The growing interest in cryptocurrencies in the world has been accompanied in recent years by the warning of international entities and organizations about the risks of being a highly volatile currency that lacks control.
Recently the cases of scams that have been on the rise. In countries such as Turkey, Spain and China, the authorities carry out large investigations in which millionaire fraud with the use of virtual money has been detected.
The volatility and lack of control of crypto assets increases the risk of illicit activities, according to expert economists in various parts of the world. Christine Lagarde, president of the European Central Bank recently requested the global regulation of Bitcoin as it is considered a highly speculative asset.
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In an article published in the magazine “LÉNA hors les murs”, Lagarde points out that the blockchain, (it is used to refer to the core of crypto assets such as Bitcoin), also provide new opportunities, new risks.
“Users cannot trust crypto assets to maintain a stable value. They are highly volatile and speculative, so they do not fulfill all the functions of money, “he said in an article posted on the ECB’s website.
After El Salvador adopted Bitcoin as legal tender, the International Monetary Fund (IMF) also warned about the risks of the use of cryptocurrency which, it points out, involves a series of “macroeconomic, financial and legal” issues that must be “analyzed in depth”.
Gerry Rice, spokesman for the IMF stressed that “the use of cryptocurrencies can pose significant risks”, which is why he suggested that there should be “effective regulatory measures.”
According to data from the United States Federal Trade Commission (FTC), 7,000 people declared losses worth more than 80 million dollars in this area between last October and March.
Compared to the same period last year, complaints increased almost 12-fold and the amount of money stolen increased by almost 1,000%.
These are five cases of millionaire fraud with cryptocurrencies that are being investigated by the authorities in various countries of the world.
1. More than a thousand detainees in China who formed a network of Bitcoin scammers
China had been a bastion of the Bitcoin, the most widespread of virtual currencies. But Beijing took a radical turn in 2019 and banned payments in cryptocurrencies, accused of being instruments in the service of “criminal activities.”
1,100 people were arrested across the country on Wednesday, June 9, 2021, on suspicion of being part of a “criminal organization,” according to the Ministry of Public Security.
They are accused of using cryptocurrencies to “launder money” from phone and internet scams.
The arrests took place in Beijing, the neighboring Hebei region, the Shanxi (north) region and Liaoning, a province bordering North Korea.
The authorities did not specify the amounts involved or the cryptocurrencies used.
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In recent weeks, China tightened restrictions on so-called bitcoin mining, the energy-consuming process of creating cryptocurrencies.
2. Spain: The biggest cryptocurrency pyramid scam ever
The company in question is Arbistar 2.0 SL which operated in Spain and promoted itself as a platform specialized in trading, marketing analysis and software development to operate in the cryptocurrency market.
The Arbistar case became known last April. A Spanish court is investigating the case considered the largest cryptocurrency investment pyramid scam to have occurred in this country and whose amount could amount to 1oo million euros (120 million dollars). The authorities estimate that the number of those affected may reach 32,000 investors.
According to research, the company attracted investors by offering profitability of 8 and 15% per month and with practices that motivated them to invest larger amounts in the hope of having better returns.
Arbistar began to be investigated after several of its clients requested to withdraw their funds last August and their request was not honored. Santiago Fuentes, who appears as the sole administrator and owner of a third of the investments, is the main investigated.
Audiencia Nacional, a Spanish court based in Madrid, has indicated that once Arbistar captured the client, he had to open an account or virtual space where he could carry out purchase and sale actions and register an electronic wallet to store the cryptocurrencies. Investors’ savings were moved to companies dedicated to the cryptocurrency business based in San Francisco and Estonia, and were then returned to the client’s electronic wallet, which in turn sent their contributions to Arbistar’s wallets, at the time the one that the contributions were outside the control of the investor.
In September Arbistar sent a series of messages to its clients and posted some videos on YouTube where it said that an error in the community bot (computer algorithm) had generated more interest than the real ones, which had caused a mismatch in the company’s accounts and in turn a liquidity problem.
Fuentes was arrested on October 22 for the crimes of aggravated fraud, falsification of commercial documents and criminal organization, while the case passed into the hands of the National High Court, the court in charge of major crimes such as organized crime. About 10 more people have an international arrest warrant.
3. Turkey: Thodex CEO flees with $ 2 billion in Turkey
Thodex, the leading cryptocurrency operator in Turkey, was the epicenter of a multi-billion dollar fraud that affected bitcoin around the world last April, after its founder and SEO, Faruk Fatih Ozer, the country’s $ 2 billion miner, affecting 391,000 investors.
After the scandal and closure of this currency exchange platform, around 70 people were arrested and another 15 were wanted by the justice, while a week after the biggest deception in the world of cryptocurrencies, bitcoin fell 9.7% after trading to $ 49,700, according to publication of specialized sites.
“The fall of bitcoin affected the rest of the cryptocurrency market that reversed the gains of the last week and affected assets such as Etherum, Binance Coin and XRP, among others,” reported the newspaper La Nación, which takes up a report from the trading site Coinmarketcrap in which it points out that the devaluation of the currency meant 18% in just one week.
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The Thodex platform was out of service since last April 21, in its social networks the company indicated that it was a closure for a few hours which was later extended to five days. As panic began to spread, the company said in a statement that all of its clients would receive their savings.
Thodex was created in 2017, the date from which it became one of the main cryptocurrency trading platforms in the country thanks to its large advertising campaigns in which famous actors and some government officials participated.
4. Turkey: Vebitcoin shuts down amid fraud allegations
In the same week, another cryptocurrency platform in Turkey closed operations amid allegations of fraud. It was Vebitcoin, where four employees were arrested and a large part of its clients withdrew. The company announced the closure noting financial tensions.
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“Due to recent developments in the crypto money industry, our transactions have become much more intense than expected,” the company said in a statement. Vebitcoin had a daily volume of almost $ 60 million.
The scam accusations came in the face of an imminent ban on the use of cryptocurrencies by the Turkish government in the face of a sharp drop in the local currency. In recent months, more people were looking to secure their savings through cryptocurrencies. Turkey announced a ban on this method for the payment of goods and services from April 30.
5. Group of “Fakes” Elon Musk Has Stolen $ 2 Million in Cryptocurrency Scams
The FTC (United States Federal Trade Commission) reported on May 17 that people posing as Elon Musk have stolen more than $ 2 million from investors since October 2020 in cryptocurrency scams.
This type of scam is based on “the promise that a celebrity associated with cryptocurrencies will multiply the cryptocurrencies you send to their wallet and return them to you,” according to the FTC.
The publications on his Twitter account and the public statements of Elon Musk, the head of Tesla – the American giant manufacturer of electric vehicles – usually make the price of several cryptocurrencies react sharply.
Last week, the billionaire businessman announced that Tesla would stop accepting bitcoin as a form of payment, considering that the virtual currency, whose creation requires immense amounts of energy, is too polluting.
According to the FTC, the average loss from a cryptocurrency scam is $ 1,900. It further notes that people between the ages of 20 and 49 are the most likely to be scammed.