4 Biggest Scandals in Cryptocurrency History

Cryptocurrency fascinates many people, and for a reason – it is both financial and technological advancement the world hasn’t seen before. The system in which it operates is a new one, based on a blockchain, making money transferring easier than ever. This all was made possible when the first crypto, the Bitcoin, was introduced more than ten years ago.

While in the start, many were afraid of investing in BTC and cryptocurrencies that came after, now everyone is flocking their way. This was to be expected when their value to be found, but in recent years it all took a dramatic u-turn. Why? Well, the reason is simple. When there’s money to be made, there are those willing to go against the law and morale to make a quick earning. If you spend even a little time on the internet, you have heard at least one story about BTC thievery or some other crypto-related scam.

Today, we have too many people involved with this branch of finances, and of course, shady characters are trying to take advantage of innocent investors, exchanges, or cryptocurrency miners. When some of them manage to do their job as intended, it gets straight to the news, as a matter of fact, is that when you steal BTC or some other crypto, you’re about to make a massive paycheck. There were several cases when big scandals went public, and in this article, we are going to talk about the four biggest scandals in cryptocurrency history.

1. The Mt. Gox Disaster

Source: fortune.com

Today you have many cryptocurrency exchanges making strides in this financial segment. But, rewind a couple of years, and you’ll see one name towers above all others – Mt. Gox. If you are currently entering the world of crypto, you know about Coinbase. Mt. Gox was as massive if not even more significant crypto presence back then. When it was at its peak, almost 70% of all crypto tradings went through it.

But, as at that time, almost a decade ago, safety and security weren’t as valued as it is today, their wallet was breached, and funds went missing. One hacker did the unthinkable, hacked their system, and replaced credentials transferred all of Bitcoin to his account. The coin that was left behind was put into cold storage. You would have thought that everything ended right there, but it didn’t.

Their wallet continued being an easy target for those willing to take a bit of risk and stealing from it, and transaction which was illegal continued. It became a massive issue, not only for Mt. Gox but for the United States as well, and even Homeland Security got involved in the matter. It needed to be done, as Mt. Gox failed to make things right, and everything went south as more time progressed.

By being unable to pay the funds to their clients, after a three-year struggle, the company filed for bankruptcy. I don’t think this ended their troubles. Even today, they are still fighting various lawsuits, seeking retributions, and those responsible for crimes against them. Luckily, today we have many legal enterprises dealing with cryptocurrencies.

For more info, check https://bitcoins-era.io.

2. James Howells’ 127 Million Dollar Mistake

Source: cryptimi.com

This is a story that should ring a bell. James Howell was one of the first miners in the world, who used his laptop for mining, looking to make himself rich by dealing with BTC. It was an excellent time to be a miner, as cryptocurrencies were young themselves. Four years after starting his crypto quest, he decided it is the right time to sell his computer. He sold it without his hard drive on which he stored the crypto he mined. Smart move at the time.

At the moment of selling his laptop, he amassed close to 7,500 Bitcoins; all kept safely in his drive. Back in 2013, this would amount to close to $125,000,000. But, while he was a hardworking miner, he made a stupid move by throwing his drive out. Upon realizing his mistake, he tried to recoup it, but the attempts went unsuccessful as the city council and his local landfill site is against it. There are many legal, environmental, and engineering requirements needed to be fulfilled for him to have it back. We can only hope that he’ll be able to retrieve it.

3. Mark Karpelès Low-Key Theft

Source: japantimes.co.jp

This case is a direct continuation of what happened to Mt. Gox. The more you hear about this company, the more shocked you get. There are many aspects of this case that are hard to believe, and this one fits the bill. Mark Karpelès was the chief manager at Mt. Gox when everything went south. He was one of the first people to know that hackers are stealing BTC from them. His reaction was all but the right one.

Instead of trying to catch the culprit, or at least try and find out who was it that stole, he decided to take $1 million to himself, hoping that it will go unnoticed in the whole commotion. Later, he transferred another $3 million from client accounts to his own, making matters even worse and leveling himself with the original hacker. Luckily his moves were recorded, and it wasn’t too long before he was apprehended. Interestingly he claims his innocence in front of the court.

4. The Dead End of Silk Road

Source: cryptonomist.ch

The place that had it all. Silk Road was the Dark Net’s most significant marketplace for all things illegal. Those who wanted to have their transaction in the dark used BTC, believing it would make them completely invisible. What they didn’t know back in the day is that every BTC can be traced to its origins. The belief that BTC guaranteed anonymity was widespread, and even the Silk Road owner Ross Ulbricht believed the same and thus left himself exposed. During a raid in 2014, he ended up in prison after being traced through BTC he received and later spent. You’ll be glad that a dark man like this one got life in prison as his sentence.

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