Grueling Crypto Frauds in 2022

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Grueling Crypto Frauds in 2022

We have just entered six months into 2022, and billions of dollars’ worth of cryptocurrency scams have already pillaged and plundered innocent victims.

Even if the amount of cryptocurrency that has been taken is astounding, not everything is only about the money. For example, the greatest cryptocurrency frauds of 2021 impacted so many lives emotionally and mentally. Yes, substantial sums of money were being laundered through the numerous schemes and scams on that list. Nonetheless, it is worth mentioning about boldness and the unique approach of some of these hacks performed by people who managed to walk away with thousands of worth of cryptocurrencies that are worth mentioning.

  1. Ukraine rug pulls donors

Although there are a lot of scams that, in the end, cause anxiety and mental harassment, there are rare “good” scams.

As Russia invaded Ukraine in February of 2022, the Ukrainian government quickly accepted cryptocurrency donations to capitalize on the big money players in the crypto field who are constantly trying to inflate their coins and get headlines.

Although Ukraine managed to raise a decent amount of donations, after the Ukraine government announced an airdrop for those donating through the Ethereum network, the amount of crypto pouring in increased, an airdrop is when freebies are distributed to owners of crypto wallets, typically in the form of crypto tokens or NFTs. In addition, Ukraine said they provided contributors a “reward” for their contributions.

It is worth mentioning there are many crafty people out there, and we mean quite a lot! People started donating to the Ukrainians, trying to take advantage of the airdrop. On the Ethereum blockchain, more than 60,000 transactions were made to Ukraine in less than two days. According to Ukrainian officials, people began sending minimal quantities of money only to register in time for the airdrop. These people supposedly wanted to take advantage of a nation at war by receiving a “prize” worth more than what they had donated to sell the freebie for a profit.

A few days after announcing the airdrop, Ukraine decided to cancel it. Some donors who wanted to make the best of the opportunity cried “scam,” and technically, they are correct since this is similar to rug pull scams where the developer may make promises of raising funds only to abandon the project while taking away all the liquidity.

This is a rare situation where Ukraine wanted to thank their donors, appreciating those who meant well. Unfortunately, they did not honor their promise to airdrop as they saw many greedy people trying to take advantage of them. The donation was for a charitable cause and was used for it. And since it is a rare occurrence, it deserves applause for a good reason.

  1. Stealing $615 million under the nose

This kind of scam was pulled right under the nose, and nobody even realized it. And that is exactly what happened with Sky Mavis, responsible for Axie Infinity, a popular crypto game, unaware that $615 million was stolen from them.

On the Ronin blockchain, the Ethereum-based sidechain that powers Axie Infinity, hackers found a vulnerability in March. Even worse, Sky Mavis’s update in December that loosened security precautions led to the vulnerability, which was meant to be a temporary change. Instead, hackers took advantage of the fact that the security protocol was not up.

It therefore begs the question, “How did Sky Mavis learn that hundreds of millions of dollars had been taken from them?” The incident was discovered when a user attempted to withdraw money but was unsuccessful because there was no longer any liquidity.

Axie Infinity is an online game where users can earn cryptocurrency as they play the game. Before users can go ahead and play the game, they need to buy expensive NFTs. After buying those NFTs, the players can multiply their earnings in cryptocurrency by playing the game. However, the cost of these NFTs is pretty steep. Those players who cannot enter the game due to affordability issues are often exploited by the “Scholarship,” requiring them to split the profits with other users who loan out these expensive NFTs needed to play.

Still, there are countries like the Philippines where Axie Infinity has become very popular to such an extent that users are earning equal to that of an average salary earned by the citizen. But unfortunately, those users found out they could not access their earnings due to the hack.

Although Axie Infinity managed to raise $125 million to reimburse its users for the funds stolen, they still have a long way to go to generate a total of $625 million lost. It is difficult to recover all the money they lost in the hack, and as per the U.S. government, the hack was carried out by North Korean hackers.

Conclusion:

Whether raising money in the form of cryptocurrency for charity or a noble purpose, it is sickening to find that people try to profit from it. A firm or a nation trying to show gratitude to those who stood by them during the difficult times is taken for granted by those who have their vested interest.

We have been witnessing a constant evolution of cryptocurrency scams. Scammers are getting innovative to pull people into scams. The sad part is that even celebrities who take their investments carefully can also be victims of such scams. Speaking volume of the scammers and the innovative ways they use to entice their victims.

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