Warning: 5 Alarming Crypto Scams That Rose to Prominence
In the exciting, fast-paced world of cryptocurrency, the allure of quick profits often overshadows the inherent risks. While many projects aim for genuine innovation, some are nothing more than elaborate schemes designed to separate investors from their hard-earned money. These aren’t always obscure, back-alley operations; sometimes, the most concerning ventures manage to reach the biggest stages. Crypto investigator ZachXBT recently highlighted this issue, pointing out questionable Token2049 sponsors, reminding us that a prominent presence doesn’t guarantee legitimacy. It’s crucial for every investor, especially newcomers, to understand the signs of potential crypto scams and how to navigate this complex landscape.
Why Do Shady Crypto Projects Endure?
It’s a puzzling phenomenon: despite weak fundamentals, controversies, and even outright fraud allegations, some shady crypto projects continue to exist and even attract dedicated followings. While many fail quickly, a select few demonstrate remarkable persistence. What drives this resilience?
- Speculative Trading: The promise of sharp price fluctuations draws risk-tolerant traders seeking quick profits. Even a project with no real utility can see its token price surge due to speculative interest, creating an illusion of success.
- Dedicated Communities: Many questionable projects cultivate loyal supporters, often driven by meme culture, nostalgia, or a shared belief in the project’s eventual success, regardless of facts. This community support can keep a project alive even when fundamentals are lacking.
- Low Market Liquidity: Limited trading activity can be a double-edged sword. While it might indicate low interest, it also allows large investors or insiders to influence prices with relatively small amounts of capital, creating artificial pumps that attract unsuspecting speculators.
- Periodic Hype Cycles: Social media trends, influencer endorsements, or unexpected news can temporarily boost interest in these coins. These fleeting moments of attention are often enough to draw in new investors, extending the project’s lifespan.
It’s important to remember that when claims are bold without verifiable evidence, a coin is likely to be sketchy. Scammy projects often use flashy narratives, like “1,000x guaranteed returns” or “satellite-powered DeFi,” to hook traders.
Unmasking Questionable Token2049 Sponsors
ZachXBT, a well-known crypto sleuth, raised concerns about the due diligence (or lack thereof) performed by organizers of major crypto events like Token2049. He emphasized that a project being a platinum sponsor does not inherently increase its credibility. Here are five projects he flagged, which persist despite opaque operations:
| Project Name | Origin/Claim | Controversies | Why Questionable | What Sustains It |
|---|---|---|---|---|
| Spacecoin (SPACE) | Launched by Gluwa (2024-2025), title sponsor of Token2049. Aims to be the first decentralized physical infrastructure network (DePIN) powered by satellites, providing global 5G internet. | ZachXBT labeled it “botted” and unreliable. | Claimed smart contract audits without naming a firm or providing public reports (June 2022). No verifiable documentation for satellite launches. | Strong promotional efforts, event sponsorships, speculative interest, dedicated community, and media attention keep limited trading activity alive. |
| JuCoin | Previously Jubi, a Singapore-based crypto exchange established in 2013. JU token and CeDeFi services expanding by 2025. | Flagged by ZachXBT as a “sketchy” platinum sponsor. History of ownership changes, rebrands, and regulatory pivots. | Lacks regulation in major markets (US, EU), despite applying for a license in Taiwan. Only regulated by Singapore’s Monetary Authority. | Speculation around the token and aggressive marketing drives trading activity. |
| Weex | Singapore-registered crypto futures platform operating since 2018. Offers anonymous trading and bonus incentives. | Not regulated by any financial authority with strict standards. | Social media complaints about unusual exchange behavior, including frozen accounts and unexpected KYC issues. | Appeal of futures trading, speculative interest in high-yield opportunities, and aggressive promotions maintain trading volume. |
| DWF | Platinum sponsor at Token2049. Market maker operating on over 60 exchanges, involved in high-profile investments. Limited public information about background or team. | Accusations of wash trading as a market maker. Recent allegation of a “rug pull” from Vite Labs. | Vite Labs claimed development funds were “rugged” by DWF’s market-making services, coinciding with Binance delisting the project (March 27, 2025). | Recognition from conference sponsorships, promotional narratives, and speculative hype around listings keep minimal trading interest alive. |
| Bitunix | Crypto exchange registered in Saint Vincent and the Grenadines, founded around 2021. Offers spot and futures trading. | Labeled “sketchy” by ZachXBT. Drew scrutiny from South Korea’s Financial Intelligence Unit (FIU) for providing services to Korean customers without required registration. | Limited regulatory oversight and an unclear corporate structure undermine trust. | Trading volume driven by listings of niche altcoins, bonus incentives, and speculative traders seeking quick profits. |
Past Deceptions: Real-World Crypto Scams Exposed
The history of cryptocurrency is unfortunately littered with examples of projects that used high-profile appearances to mask fraudulent operations. These instances serve as stark reminders of the need for vigilance when dealing with any crypto venture.
JPEX: The Disappearing Act at Token2049
At Token2049 in Singapore, the crypto exchange JPEX invested $70,000 to become a platinum sponsor, leveraging the event’s prestige to project an image of legitimacy. However, this facade quickly crumbled. After Hong Kong regulators issued warnings in mid-September 2023, JPEX abruptly abandoned its booth and vanished from the event by the second day. Shortly afterward, the exchange halted withdrawals, imposed exorbitant fees (999 USDT on 1,000 USDT transactions), and faced thousands of fraud complaints. Authorities launched investigations, leading to arrests, asset freezes, and estimated investor losses exceeding 1 billion Hong Kong dollars.
HyperVerse: A Lavish Ponzi Scheme
HyperVerse presented itself as a groundbreaking crypto and metaverse platform, hosting extravagant promotional events, including a $3,500-per-person party on a $40-million yacht featuring rapper Rick Ross. It promised daily returns and a “perfect virtual world” to attract global investors. However, US regulators later exposed HyperVerse as a massive Ponzi scheme that defrauded investors of approximately $1.89 billion. Key promoters, including Steven Lewis and Brenda Chunga, were charged by the US Securities and Exchange Commission for their roles in the fraudulent pyramid scheme.
These cases highlight a common tactic: using bots to create fake trading volume and trick platforms into ranking them higher. Always research thoroughly before investing.
Essential Crypto Red Flags for New Investors
For those new to cryptocurrency, identifying suspicious coins early can prevent significant financial loss and stress. Understanding common crypto red flags is your first line of defense:
- Anonymous or Unclear Teams: Legitimate projects usually have transparent teams with verifiable backgrounds. Be wary of projects with anonymous founders, vague team descriptions, or a history of frequent rebrands.
- Overhyped Marketing Tactics: Excessive reliance on aggressive marketing, meme-driven social media campaigns, paid influencer endorsements, or unrealistic claims like “guaranteed 100x returns” are major warning signs. Genuine innovation speaks for itself; scams need to shout.
- Low Liquidity and Concentrated Ownership: Coins with very low trading volume or a significant portion of tokens held by a few wallets are highly susceptible to price manipulation by insiders. Check on-chain data to see token distribution.
- Poor Tokenomics: Examine the token’s economic model. Red flags include an excessively large token supply, unclear token-burning processes, or allocations that heavily favor insiders. These can indicate a setup for a pump-and-dump scheme.
- Limited Exchange Listings: If a coin is only listed on lesser-known, unregulated, or obscure exchanges, it often lacks transparency and credibility. Reputable exchanges conduct rigorous due diligence before listing projects.
- History of Problems: Research any past issues associated with the project, such as halted withdrawals, prior scam allegations, or regulatory warnings. A history of problematic behavior is a strong indicator of future issues.
How to Protect Crypto Investments from Fraud
Vigilance and thorough research are your best allies in the crypto market. Here’s actionable advice to help you protect crypto investments:
- Research the Team and Project History: Dive deep into the project’s whitepaper, roadmap, and the team’s professional background. Look for verifiable credentials and a clear, consistent history.
- Evaluate Marketing Tactics Critically: Don’t fall for flashy promises or influencer hype. Focus on the project’s technology, use case, and actual development progress.
- Assess Liquidity and Token Distribution: Use tools like blockchain explorers to check trading volume and token distribution. Avoid projects where a small number of wallets control a large supply of tokens.
- Verify Exchange Listings and Regulatory Compliance: Prioritize projects listed on well-regulated, reputable exchanges. Check if the project itself has any regulatory licenses or is operating in jurisdictions with robust oversight.
- Investigate Past Issues: A quick search for ‘[Project Name] scam’ or ‘[Project Name] fraud’ can reveal a lot. Look for news articles, community discussions, or regulatory warnings.
- Utilize Reliable Tools and Diversify: Avoid relying solely on influencers or trending charts. Use on-chain analytics to monitor wallet activity and market movements. Crucially, diversify your investments across different assets and sectors to limit risk exposure.
Shady coins often act as warnings rather than genuine investment opportunities. They attract investors with promises of massive profits, but they typically hide manipulative schemes, unclear team backgrounds, and weak fundamentals. Despite frequent market crashes or controversies, these coins persist due to the unpredictable, community-driven nature of crypto markets. Your best defense is a proactive approach to research and a healthy dose of skepticism. Remember, if something sounds too good to be true, it probably is.
