3 of The Most Shocking Cryptocurrency Scandals - Global Coin Report
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3 of The Most Shocking Cryptocurrency Scandals

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cryptocurrency scandals

Author: Benjamin Lee

It goes without saying that Bitcoin and other forms of cryptocurrency have the potential to make or break fortunes in the blink of an eye. Unfortunately, one of crypto’s biggest strengths is also potentially one of its biggest flaws which is the relatively unregulated nature of cryptocurrency.

With dozens of new exchanges and e-wallet services appearing every other day with literally zero regulation, fraud and hacking are one of the biggest risks associated with investing in Bitcoin. As can be seen from the 2016 Bitfinex hack which resulted in losses of US$66 million, the risk are indeed very much real.

Along with this the relatively lawless nature (legislation wise) of the cryptocurrency industry makes it susceptible to moral hazard. Described as a situation in which an individual may be tempted to take extreme risks in an attempt to gain profits, the prospect of moral hazard is very real in the crypto world. Join us as we take a look at some of the biggest crypto scandals so far.

  1. QuadrigaCX

A dead CEO, accusations of a fraud and missing millions. All these make for an intriguing thriller that shook Bitcoin News, but for the thousands of customers who lost their holdings of cryptocurrency, the nightmare is very much real.

Back in 2018, the CEO of QuadrigaCX; Gerald Cotten passed away while honeymooning in India. Following this, his company QuadrigaCX announced that they were unable to gain access to the company’s deposits of cryptocurrency; a situation which immediately was a cause for alarm.

The reason behind this was QuadrigaCX used of cold wallets which are offline storage repositories that offer greater security from hacking. However, as Cotten was supposedly the only one with access to the passwords, the company was unable to return funds owed to their customer.

An investigation was launched into QuadrigaCX and this revealed several startling revelations. Firstly, after gaining access to Cotten’s laptop, audit firm Ernst & Young were able to track down all of the cold wallets owned by QuadrigaCX. However, the cold wallets that were supposed to hold between US$140 million and US$190 million worth of cryptocurrencies had been emptied.

Following the trail of money, Ernst & Young’s investigators discovered that funds had been systematically transferred out of the cold wallets an entire year prior to Cotten’s death. This left customers and investigators with a shell of company and zero currency.

Following these discoveries, several theories have been put forward with many believing that Gerald Cotten faked his own death to escape with millions. While his widow claims otherwise, the jury is still out on what happened to QuadrigaCX’s deposits.

  1. Mt Gox

Founded in 2010 by American programmer Jed McCaleb, Mt Gox actually stands for “Magic The Gathering Online eXchange.” Despite the odd name, Mt Gox would go on to become the world’s largest Bitcoin exchange, for a short time.

At one point, Mt Gox was estimated to have handled a whopping 70% of all Bitcoin transactions in the world. However, Mt Gox’s rise to fame was never smooth. From repeated security breaches, hack attacks, an incompetent CEO and even a lawsuit from the US government, Mt Gox was constantly plagued with legal and financial troubles.

Disaster struck in 2014 when Mt Gox declared bankruptcy after losing US$500 million worth of Bitcoins. It was discovered that hackers had systematically emptied out Mt Gox’s wallets without the knowledge of the company. When users complained that they were unable to withdraw their funds, Mt Gox when silent and disappeared from all social media.

To this day nearly 5 years after the debacle, creditors are still fighting to recover the funds owed to them by Mt Gox. In fact, the wait has been so long that some creditors have even chosen to sell their claims at a discounted rate. In some ways, you could even say that Mt Gox is the crypto equivalent of Enron.

  1. NiceHash

NiceHash is a Slovenia-based crypto mining platform which brings miners and investors together. In December of 2017, Nice Hash was hit by an extremely sophisticated hack attack that invaded the system and resulted in a massive loss of 4 million 736 thousand 42 Bitcoins. Yes, the number of Bitcoins was so heart-wrenchingly big that we had to spell it out precisely.

At that point in time with Bitcoins being valued at roughly US$19,000 per Bitcoin, the total estimated losses would have been in the trillions. Further adding to the misery of all parties with the exception of the hackers, none of the money or Bitcoins were ever recovered. Consequently, the entire management team including CEO Marko Kobal resigned from NiceHash.

However, NiceHash was able to bounce back from this catastrophe and remained in business after salvaging their damaged reputation. To this day, NiceHash are still trading in Bitcoins and other cryptocurrencies.

From what we have seen, the world of cryptocurrency is an extremely lucrative yet risky proposition. Whether you’re an investor, speculator or crypto miner, it is vital that you stay on top of the game at all times. Keep in the know on the latest Bitcoin and cryptocurrency news with CEO World Magazine.

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The Pros And Cons Of Cryptocurrency

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Many facets of our lives are now digitized––money is no exception. 

Have you noticed that paper money is on its way to being obsolete because so many people receive direct deposit and love the simplicity of their debit card? 

Not to mention, cash carries germs, as we’ve heard lots about during the pandemic. Many businesses have turned to card only options in light of this. 

But what about cryptocurrency?

You probably heard everyone raving about it a few years ago, but the excitement’s calmed down quite a bit. That doesn’t mean that it’s not a viable option you should keep in mind. 

What’s Cryptocurrency? 

Let’s start with the basic definition of cryptocurrency so we’re all on the same page. Cryptocurrency utilizes cryptographic methods and complex coding systems to encrypt sensitive information during data transfers. This protects your funds and personal information on a whole different level. 

These transactions are virtually impenetrable due to the combination of mathematical and technological protocols created and put in place. This aspect of cryptocurrency is what makes it safer. Also, the details of transactions are kept private. No one can see who sent what, etc., because those rigorous mathematical and technological protocols protect it.

The Pros: 

Different From Traditional Banking Transactions

One thing people hate about traditional banks is the fact that they can…

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Enhancing the DigitalBits Ecosystem through the XDB Foundation

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The DigitalBits ecosystem welcomed a new benefactor in the form of the XDB Foundation, a non-profit organization dedicated to providing support for DigitalBits. The main objectives of the XDB Foundation include the DigitalBits Ecosystem Support Program, supplying both financial and non-financial assistance to qualified entities and projects within the DigitalBits community, with a focus towards innovation and speeding ecosystem growth.

Michael Gord, MLG Blockchain and GDA Capital founder, has been appointed to the role of Managing Director of the XDB Foundation.  “I am excited to see the launch of the XDB Foundation and to be joining the DigitalBits ecosystem in this new capacity,” says Gord. “In the coming weeks, the XDB Foundation will share additional updates regarding its key initiatives.  Over the past 2 years, we have seen DigitalBits achieve various milestones and with this next chapter I’m excited to see the XDB Foundation contribute as the new project lead supporting education, research and development, and ecosystem growth and adoption.”

Michael Gord’s first initiatives within blockchain started with establishing the McGill Students’ Cryptocurrency Club, McGill Students’ Fintech Association, Bitcoin Canada and providing leadership on the global expansion of the Blockchain Education Network.  Notably, he is also a key contributor to the Kerala Blockchain Academy, one of the largest innovation hubs for blockchain technology worldwide. 

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As Global Tensions Grow, Bitcoin Price May Go Higher

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BTC Surged Again as A Safe Haven Asset During Global Tensions

  • India – China Border Conflict

After weeks of squabbling and brawling along their long-disputed border, hundreds of Indian and Chinese soldiers engaged in a deadly clash Monday in a river valley that’s part of the region of Ladakh last week. Troops had massed on both sides of the border in recent months in the northern India region of Ladakh and the southwestern Chinese region of Aksai Chin, causing global concerns of a potential escalation between the two.

  • North and South Korea Clash

Last Tuesday, North Korea destroyed the liaison office it jointly operates with South Korea in the city of Kaesong, just north of the demilitarized zone that separates the two countries. 

North Korea also said it would send troops to now-shuttered joint cooperation sites on its territory, reinstall guard posts and resume military drills at front-line areas in a violation of separate 2018 deals with South Korea. Jeong said South Korea will take “immediate, swift and corresponding” steps to any North Korean provocation.

The tensions grown in Asia and the potential “second wave” of coronavirus in the United States may add more difficulties to the global economic recovery. Thus, Bitcoin, as a safe haven asset, attracts more investors to buy and hold. 

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