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.
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…