Crypto Investor Scam Report: Over $16 Billion Stolen From Investors Since 2012
Cryptocurrencies are an exciting asset class. In just 12 years, the market has gone from $0 to nearly $1 Trillion as of today’s writing. This growth has attracted investors of all sizes, from small retail investors to institutional investors with billions of dollars under management.
Unfortunately, it’s also attracted hundreds — if not thousands — of bad actors who lie, steal, and cheat investors out of their capital. This is common when it comes to emerging technologies. Criminals use the hype and lack of regulatory infrastructure to take advantage of investors.
Despite the accelerated growth in the crypto assets market, scammers have plagued the market’s reputation by luring investors with promises of quick and large returns, and then disappearing overnight with the invested capital. But how much harm have scammers brought to investors? How are authorities doing about prosecuting these scammers?
We wanted to answer these questions and more. In order to put some hard numbers to the size of this problem, we conducted research on crypto-related investment scams that took place from January 1, 2012 to December 31, 2020.
Our findings are based on media articles, press releases, legal filings, and court documents.
- Investors have lost an estimated $16,149,661,014.00 since 2012.
- Investors lost that much from 136 different scams.
- 527 individuals have faced criminal charges for their roles in crypto-related scams.
- The combined sentences for individuals involved in scams is over 160 years.
- 14 crypto projects have seen their members charged and sentenced to date.
- Of all reported scams, 24 projects or organizations have no known charges — civil or criminal.
These findings include any organization that used cryptocurrency to defraud investors. This includes investment funds, ICOs, and trading schemes.
The findings include only organizations or individuals who have received civil charges, criminal charges, or widespread allegations of fraud, such as the project’s website or social media channels going dark after raising funds.
- It does not include projects that were hacked or breached.
- It does not include companies that were charged with running unregistered securities.
- It does not include those who were charged with crimes related to money laundering.
- The value of the investments were calculated in USD and are based on the amounts reported either by the media or through legal filings.
- Research was done in English so data could be missing for cases that were not covered by English speaking media.
Part 1: Over $16 Billion Lost
Based on our research, $16,149,661,014.00 has been stolen from investors since 2012 across 132 different scams.
The first big scam to rock the world of crypto was the Bitcoin Savings and Trust scam, which started in 2012 and eventually defrauded investors out of 146,000 bitcoin — roughly $97 million dollars at the time of the founder’s initial charges by the SEC in 2013.
The founder, Trenton Shavers, was charged with one count of securities fraud and one count of wire fraud. He faced up to 40 years in prison before eventually pleading guilty and receiving a sentence of 18 months in prison.
As the value of Bitcoin started to rise and other cryptocurrencies launched, scammers saw it as an opportunity to take advantage of enthusiastic investors who probably didn’t know much about the space. There were 41 scams in 2017 — the biggest year for them to-date — followed by 39 in 2018. In the majority of cases, these scams took several years to uncover and see the founders charged, so it’s worth noting that these numbers will likely increase dramatically in the years ahead.
Part 2: Criminal Charges and Arrests
Since 2012, 71 projects have suffered criminal charges, amounting to 527 individual arrests. OneCoin, which stole an estimated $4 billion USD from investors, had the highest number of arrests, with 140 individuals being arrested for their roles in the scheme.
Of these arrests, to date, only 14 projects have sent members to serve prison sentences for their crimes. The prison sentences total roughly 161 years.
Part 3: Uncharged Projects
Of the 132 identified scams, we’ve identified 324 that have not yet had any charges pressed against them.
While this could be due to the fact that they are currently under investigation, we wanted to reveal them here in order to raise awareness about the nefarious deeds taking place in the industry.
This report will be forwarded to the relevant authorities in each jurisdiction.
All organizations and names listed are presumed innocent until found guilty by the courts — our goal here is to simply ensure that this is on the radar of the appropriate authorities.
The findings of this study helped us quantify the crypto scam problem, assessing the harm that crypto scams have brought to investors and how effective authorities have been at prosecuting perpetrators thus far.
Adding to the hard numbers, here are our key takeaways:
- The longer bad actors are allowed to continue scamming investors, the longer it will take for the crypto asset class to institutionalize and mainstream adoption.
- Investigators should continue to keep track of this problem and monitor the evolution of these and later findings with the goal of cooperation between affected communities and authorities. Further research will also increase awareness of the methods scammers utilize to perpetrate their schemes so communities can protect themselves against them.
- We need to create, expand, and strengthen crypto regulatory frameworks worldwide to prevent scammers from taking advantage of loopholes with cryptocurrencies while being careful to not discourage the growth of the space.
Education is key to help bring awareness to newcomers.
For a copy of the Crypto Scam Database we compiled in order to make this report, please send a request to firstname.lastname@example.org.