In the digital age, cryptocurrencies have become a significant part of global finance. However, this rapid growth has not come without its share of controversies and scandals. The crypto industry's recent legal battles are a testament to the complexities it faces in terms of fraud, security breaches, and regulatory compliance. This article aims to shed light on some of the most explosive crypto scandals that have made headlines in 2024.
1. Sam Bankman-Fried's Downfall: The former CEO of FTX, one of the leading cryptocurrency exchanges, found himself at the center of a major scandal in late 2023. SBF, as he was commonly known, was charged with fraud and money laundering by US authorities. His company, FTX, which had promised customers high returns on their investments, collapsed due to significant financial mismanagement. The collapse not only led to the loss of billions of dollars but also brought regulatory scrutiny to the crypto industry, sparking debates about responsible cryptocurrency trading practices.
2. Binance Coin (BNB) Price Manipulation: Another high-profile crypto scandal in 2024 involved Binance, one of the world's largest cryptocurrency exchanges. US prosecutors accused Binance and its CEO, Changpeng "CZ" Zhu, of orchestrating a massive price manipulation scheme involving Binance Coin (BNB). The allegations suggest that the company artificially inflated or deflated the value of BNBs to benefit specific trades, which is illegal under US law. CZ maintained his innocence throughout the investigation and stated that the accusations were unfounded.
3. Ethereum Classic Heist: In June 2024, Ethereum Classic, an altcoin launched in 2014 as a fork of Ethereum mainnet, suffered one of the largest heists in cryptocurrency history. Hackers exploited vulnerabilities in its DeFi protocols to steal over $6 million worth of ETC and ERC-20 tokens from unsuspecting users' wallets. This incident not only highlighted the risks associated with decentralized finance but also underscored the need for robust security measures within the crypto ecosystem.
4. Tether Bank Liquidity Crunch: Tether, the world's largest stablecoin pegged to the US dollar, faced a liquidity crunch in early 2025 when rumors circulated that its issuer, Bitwise, was experiencing issues with clearing redemptions due to insufficient reserves. This led to a significant drop in Tether's market value and raised concerns about the stability of stablecoins as a whole. The situation prompted regulatory inquiries from US authorities aimed at ensuring the integrity of crypto assets in circulation.
5. BitTorrent Founder Arrested for Crypto Scandal: In late 2024, Mike Novack, founder of BitTorrent, was arrested on charges related to fraud and misappropriation of funds stemming from his involvement with a Ponzi scheme-like crypto investment platform called Bitcoin Gold (BTG). His arrest sent shockwaves through the industry, sparking discussions about due diligence and investor responsibility in the crypto space.
6. Ripple's XRP Ban: In 2025, US federal regulators cracked down on Ripple Labs for its sale of XRP without proper registration as a security. The company was required to halt sales and pay a fine as part of the settlement. This decision marked the first time that a major crypto asset faced such regulatory scrutiny, raising questions about how other cryptocurrencies will be classified under existing US securities laws.
7. Bitfinex Hacking Case: In early 2025, the New York Attorney General's Office announced it had reached a settlement with Bitfinex over allegations that the exchange misappropriated client collateral to fund operations of its sister company, Tether, leading to an unauthorized debit to Tether's reserves. The case highlighted issues related to cross-collateralization and trust between cryptocurrency exchanges and stablecoin issuers.
8. Bitcarthe Hacked: Another high-profile crypto scam occurred when Bitcarthe, a popular online payment processing platform for Bitcoin transactions, was hacked in early 2025. The hackers stole over $3 million from the company's wallet and used this information to execute fraudulent transactions before getting caught by law enforcement agencies. This incident showed that even well-established crypto platforms are not immune to cyber attacks.
These scandals underscore the challenges inherent in a rapidly evolving digital economy, where rapid innovation must coexist with robust regulatory frameworks designed to protect investors and consumers. The aftermath of these incidents serves as a reminder that while cryptocurrencies offer exciting new opportunities for investment and commerce, they also pose significant risks that regulators, industry participants, and users must navigate carefully. As the crypto landscape continues to evolve, it is crucial for all stakeholders to work together to ensure transparency, accountability, and fairness in this increasingly global financial market.