The crypto market capitalization has skyrocketed by over 300% in 2021 and many cryptocurrencies updated their all-time highs. Bitcoin (BTC) reached $68,000 and shows +75% price performance year-to-date, while such cryptocurrencies like Cardano (ADA) have seen over 800% price increase in 2021. 2021 was a wild year for crypto and it was full of bullish stories. For example, the Bitcoin market cap reached $1 trillion, Bitcoin has finally become a legal tender in El Salvador, and Bitcoin ETFs have been approved in several countries after years of waiting.

But with the creation of wealth comes not only success stories but also various peculiar tales that give the crypto industry a bad name. So let’s look at some dramatic stories from which we may draw some conclusions in 2022. 

Insider trading at Opensea

The story began with a tweet posted by a pseudonymous Twitter user, claiming that a wallet associated with Nate Chastain, OpenSea’s head of product, had been buying up specific NFTs just before their promotion on OpenSea’s main page. OpenSea is known as one of the biggest NFT marketplaces, so when an NFT is featured on its homepage, it can quickly become more valuable. Blockchain data showed that Chastain started selling promoted NFTs when they experienced the price spike.

The tweet rapidly blew up since Chastain was known as an active and friendly participant in the NFT community. In the hours following, OpenSea uncovered evidence of insider trading by “one of its employees”, calling it “incredibly disappointing”. But for the community, it was a confirmation of Chastain’s breach.

Then Nate Chastain appeared to step down after updating his Twitter profile to “Past: @opensea.” when OpenSea CEO announced the resignation of “an unnamed employee who violated the company’s standards”.

India’s prime minister Twitter as a way to get attention

In December 2021, Indian prime minister Narendra Modi‘s Twitter account with 73.4 million followers was hacked again. Hackers claimed that India had accepted BTC as legal tender, and 500 BTC are available for immediate distribution for Indian people who sign up via a phishing link. Not so long ago, the prime minister‘s Twitter account was also hacked asking followers for Bitcoin donations. If it doesn’t seem a big thing to you, then you haven’t heard about the ongoing Bitcoin scandal in India‘s Karnataka state that is considered as the main reason for these hacks.

Karnataka’s state police and officials are accused of receiving 12,900 BTC in bribes from hacker Srikrishna Ramesh. He was arrested for hacking three crypto exchanges last year but the investigation is yet to be finished, according to Indian media outlets. Besides, when the Karnataka chief minister asked about the scandal in a meeting with Modi, the prime minister allegedly brushed off the issue. Some opposition officials have seen “a try to drop the investigation” in such prime minister’s actions.

“Squid Game” scam

On October 26, the SQUID token, inspired by Netflix’s internationally hit TV show Squid Game, debuted on a decentralized exchange called PancakeSwap. The developers promoted SQUID as a play-to-earn cryptocurrency where “the more people join, the larger the reward pool will be”. SQUID developers claimed they are affiliated with Netflix as its official token partner and called SQUID “the very own brand” of Netflix. But Netflix said it has nothing to do with this token. Token founders also claimed that they had a strategic partnership with a crypto data provider CoinGecko but this information was also quickly refuted by CoinGecko co-founder Bobby Ong.

Despite these denials, a lot of people continued buying a token, helping the SQUID price push from $0.01 to over $2,850 in a few days. But after reaching this level, the price crashed all the way down to $0.002 minutes later. As a result, investors lost $3.38 million in this “rug pull” scheme, according to Gizmodo.

A few days before the massive drop, traders started complaining that they could not sell their SQUID tokens. SQUID founders said that they had deployed an innovative “anti-dumping technology” on PancakeSwap that remained the only place where tokens are trading. A lot of crypto enthusiasts warned about SQUID being a scam from the very beginning because the project had numerous red flags, but still many people fell for the bait.

$45 million of government funds lost on 100x leverage trade

Beosin, the Chinese blockchain security company, has been under the spotlight after its chief marketing officer, Gao Ziyang, was taken into custody and accused of embezzlement of government funds. He is alleged of using state-owned assets in unsuccessful short trades on Bitcoin markets, resulting in liquidation of over $45 million.

Beosin helped Chinese authorities investigate fraudulent activities and had strong relationships with the Chinese government. Beosin was obliged to store the seized crypto assets for its further selling and returning to the treasury. But in late August, Gao Ziyang allegedly opened a short position instead of selling these funds, hoping to get profit for personal needs.

Records from a crypto exchange showed that positions began using 10x leverage. But then a trader switched to 100x leverage and faced a position liquidation. After this story, the future of Beosin, which was considered a reliable blockchain security company in China, has become a subject of serious doubt.


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