The seven biggest Fintech scams of recent years: Who got caught?

It’s been a tough year for the fintech and crypto industry, and it’s been under fire for various reasons. Among other pressures, perhaps the most damaging aspect to come out of this year has been widespread suspicious activity by alleged fraudsters in the industry.

Names that Sam Bankman-Fried and Gerald Cotten unfortunately have become synonymous with suspicion of fraudulent practices and deception. The two accused fraudsters have been alleged to have milked investors out of millions of dollars, and their stories have cast a shadow of doubt over the entire industry.

With technology and cryptospace’s reputation at an all-time low since the implosion of the dotcom bubble, it’s important to remember that many decent, serious people are still working in the industry. But it is also important to recognize the fraudsters who are always looking to take advantage of perceived weaknesses or “loopholes” in the system.

Here is a list of some famous and lesser known, alleged and convicted fraudsters.

Sam Bank Friedman – FTX fall from grace

The trial of FTX CEO Sam Bankman-Fried is set to begin in October 2023, and the case could have significant implications for the cryptocurrency industry.

Bankman-Fried was arrested in the Bahamas and charged with, among other things, bank fraud, securities fraud and money laundering. If he is convicted, he risks a prison term of 115 years. Bankman-Fried’s associates, fraudsters Caroline Ellison and Gary Wang, also pleaded guilty to related charges and cooperated with prosecutors’ investigation into the alleged scheme.

The case revolves around the collapse of FTX, a cryptocurrency exchange that was once one of the most sought after. FTX filed for bankruptcy on November 11, 2022, after it was revealed that Bankman-Fried had defrauded banks and other financial institutions out of millions of dollars. This was done by submitting false and inflated invoices for payment, using the proceeds of the fraud to pay personal expenses and make Ponzi-style payments to former victims.

Markus Braun – Inflation of Wirecard’s profits

Markus Braun was the former head of Wirecard, a defunct German payment company that was once valued at over $20 billion. In June 2020, the company collapsed in one of the biggest accounting scandals in European history.

In this context, Braun and two other former executives, Oliver Bellenhaus, who ran a Wirecard subsidiary in Dubai, and Stephan von Erffa, the company’s chief accounting officer, are charged with defrauding creditors of USD 3.7 billion through false accounting from 2015 to Wirecards collapse. in 2020.

The charges relate to their alleged involvement in inflating Wirecard’s revenue and profits to make the company appear more valuable than it was.

According to prosecutors, Braun and his co-defendants used a complex scheme to inflate Wirecard’s revenues and profits. They allegedly created fake revenue from payment processing services that never happened, while also forging contracts with third-party companies to make it appear they were making more revenue than they were.

After he resigned as CEO, Braun voluntarily surrendered to authorities in Munich and has been in custody ever since. The court has scheduled a total of 100 days of hearings which will continue until the end of 2023.

Amit Bhardwaj – King of GainBitcoin Scam

Amit Bhardwaj, who orchestrated the GainBitcoin scam, died of a heart attack earlier this year.

The GainBitcoin scam is believed to be one of the largest in the Indian cryptocurrency industry, with reports suggesting that Bhardwaj may have collected up to Rs 1 lakh crore (US$15.38 billion) from investors.

The founder of GainBitcoin and other cryptocurrency companies, such as Amaze Mining and Blockchain Research Limited, was accused of running a Ponzi scheme that collected money from investors and then used it to pay off previous investors. Amit misrepresented the total investment and inflated the figure on the company’s website.

Ajay Bhardwaj, brother of Amit Bhardwaj is also the main accused in GainBitcoin scam along with several other scammers.

Unsentenced

Charlie Javice: Frank sued by JP Morgan

Charlie Javice, the young founder of Frank, a college planning startup, raised eyebrows when it was revealed that the company had been caught defrauding JPMorgan Chase of $175 million.

Now more details are emerging about how she pulled off the scheme – and they are even more damning.

The bank accused Javice and Frank’s former head of growth and acquisitions Olivier Amar of defrauding almost four million customers. It turns out that the duo have engaged in an elaborate scheme to fill the list of millions of customers with counterfeits. The con worked like this: The 30-year-old hired a computer science professor to create fake information that fabricated nearly four million client names and emails.

Hanad Hassan – Bogus Crypto Charity Orphano

The British Broadcasting Corporation (BBC) reported that this 20-year-old man who fled war-torn Somalia to make Birmingham his home had made millions of dollars trading cryptocurrency last year.

The British public broadcaster made a 30-minute documentary titled We Are England: Birmingham’s Self-Made Crypto Millionaire before it was canceled only hours before it was scheduled to run — as charges against the alleged fraud piled up.

The fake charity token set up by Hassan was called Orfano and was launched in April 2021. The idea behind the crypto was to allocate three percent of the money invested in the scheme to charity projects.

However, Orfano abruptly stopped operations and took everyone’s belongings, and there was no withdrawal facility available to users. Hanad then relaunched Orfano as OrfanoX and repeated the same scam.

Gerald Cotten – Defunct cryptocurrency exchange QuadrigaCX

The late founder of QuadrigaCX, Gerald Cotten, is accused of misappropriating $215 million in customer funds.

Gerald Cotten was the late founder of QuadrigaCX, a now defunct cryptocurrency exchange. He was also responsible for the private keys to the firm’s cold wallets, which held the majority of Bitcoin and other digital assets.

The story began when Cotten died in December 2018, leaving behind a widow and a company with no way to access or refund customers’ funds.

In the wake of his death, it was revealed that Cotten had misused funds from QuadrigaCX for his own gain. He had opened fake accounts under aliases, credited himself with cryptocurrency and made trades. When his bets went wrong, Cotten used client funds to cover his trading losses and used money to fund his lifestyle.

Ruja Ignatova – A coin and the crypto queen

In early 2016, an enigmatic woman named Dr Ruja Ignatova took the stage at a glittering event in London. She was there to promote her new cryptocurrency, OneCoin. But first she had to show the audience that she was the real deal.

She called herself the crypto queen and told people that she had invented a cryptocurrency to compete with Bitcoin and persuaded them to invest billions.

But there was one problem. OneCoin was never actively traded, nor could the coins be used to buy anything. Dr. Ruja sold nothing more than hot air. But the scheme she created was so clever, and she lied so convincingly, that it managed to con millions of people out of their savings. She went missing in October 2017 and was one of the first crypto scammers to be added to the FBI’s 10 Most Wanted List.