August 26, 2020
Bitcoin and the rest of the cryptocurrency will be prone to make or break wealth in the blink of an eye. Regrettably, one of the crypto’s biggest strengths is also hypothetically one of its most significant flaws, which are the relatively unfettered nature of cryptocurrency.
With a lot of new exchanges and e-wallet services appearing every other day with zero management, deception and hacking are among the highest dangers connected with financing in Bitcoin and other cryptocurrencies. As reported from the 2016 Bitfinex hack that resulted in losses of $66 M, the risk is indeed very much real scandals so far.
And in this time of the pandemic, we can never be too sure that there will be no more Cryptocurrency Scandals to occur anymore. Some people will take advantage of the situation and plan something wrong either way.
Here the three most outrageous cryptocurrency scandals from the past years.
A Slovenia-based crypto mining platform, NiceHash, brings miners and investors together. During December in the year 2017, Nice Hash was hit by a tremendously sophisticated hack attack that assaulted the system and resulted in a massive loss of 4,736,042 Bitcoins. The number of Bitcoins was so harrowingly significant that it greatly affected the platform.
Then with Bitcoins being valued at roughly $11,371.13 per Bitcoin, the total estimated losses would have been in billions. Moreover, adding to all parties’ gloom with the exclusion of the hackers, no part of the money or Bitcoins was ever recuperated. Subsequently, the whole management team counting CEO Marko Kobal left NiceHash.
Fortunately, NiceHash was able to perk up from this devastation and persisted in business after retrieving their damaged status. Until this day, NiceHash is still trading in Bitcoins and other cryptocurrencies.
Accusations of fraud and missing millions and a dead CEO make for an intriguing, suspenseful story that shook Bitcoin News, but for the vast array of customers who lost their holdings of cryptocurrency, the nightmare is authentic.
In 2018, the CEO of QuadrigaCX, Gerald Cotten, passed away while on a honeymoon in India. After this, his company QuadrigaCX broadcasted that they could not gain access to the company’s guarantees of cryptocurrency, a situation which instantaneously was a cause for alarm.
The cause behind this was QuadrigaCX used cold wallets, which are offline storage sources that offer superior security from hacking. Though Cotten was allegedly the only one with access to the passwords, the company was incapable of returning funds owed to their customer.
An investigation was launched into QuadrigaCX, and this investigation revealed several startling revelations. After gaining access to the CEO’s laptop, the audit firm Ernst & Young was able to trace all the cold wallets owned by QuadrigaCX. Though, the cold wallets that were thought to hold between $140 million and $190 million worth of cryptocurrencies had been emptied.
Following the trail of money, Ernst & Young’s investigators discovered that funds had been thoroughly transferred out of the cold wallets an entire year preceding to Cotten’s death. This scandal abandoned the customers and investigators with empty company and no funds.
Assuring these discoveries, numerous theories have been put forward, with many believing that Gerald Cotton falsified his death to escape with millions. While his widow claims otherwise, the jury is still out on what happened to QuadrigaCX’s deposits.
In 2010, an American programmer Jed McCaleb, Mt. Gox, stands for “Magic The Gathering Online eXchange.” Notwithstanding the odd name, Mt. Gox would grow into the world’s largest Bitcoin exchange, for a while.
At a given moment, Mt. Gox was assessed to have handled an enormous 70% of all Bitcoin dealings in the world. Though, Mt. Gox’s rise to fame was never suave. From recurring security breaks, hack attacks, an unskilled CEO, and even a court case from the US government, Mt. Gox was continuously plagued with legal and financial dilemmas.
Catastrophe struck in 2014 when Mt. Gox declared bankruptcy after mislaying $500 million worth of Bitcoins. It was learned that hackers had methodically flattened out Mt. Gox’s wallets without the company’s awareness. It was when users nagged that they were unable to extract their funds, that Mt. Gox went silent and vanished from all social media.
To this day, six years after the fiasco, creditors are still struggling to recover the funds owed to them by Mt. Gox. The postponement has been so long that some creditors have preferred to sell their claims at a discounted rate. In some ways, some could even say that Mt. Gox is similar to Enron.
As seen from these scandals, the world of cryptocurrency is an extraordinarily lucrative yet risky proposition. Whether an investor, speculator or crypto miner, it is important to stay on top of the game. One needs to keep in the know about the latest Bitcoin and cryptocurrency news.