Scammers and losers: The five biggest failures in the world cryptocurrency

Busting companies, high-profile lawsuits, theft of money and information leakage - the inevitable companions of any sphere of business and cryptocurrency here - not the exception. Remembering the loudest scandals Bitcoin and blokcheyn industry.

Every child who is learning to walk, and then - to run, we have to fall - and often very painful. Children's errors rapidly growing industry kriptovalyutnoy - excessive credulity, carelessness, incompetence, excessive expectations -obernulis losses in the hundreds of millions of dollars. As we shall see, even successful startups and famous are not immune from this risk.

Mt. Gox - company, almost buried the Bitcoin

Japan's Mt. Gox was known as the biggest platform for the exchange Bitcoins for dollars and vice versa; in 2013 after it held 70% of transactions with cryptocurrency. Mt. Gox was founded in 2009 by American Jeb McCaleb and originally served as a stock exchange for the sale of cards to the board game Magic: the Gathering, while in 2010 the owner has not changed. As if by the will of the evil sorcerer, which are found in this game, negligence and bad faith management Mt. Gox made "evaporate" hundreds of millions of dollars; Some of her clients have lost a fortune. The question, what exactly happened with the stock exchange, is still open.

In February 2014 Exchange said about the loss of nearly 850,000 Bitcoins, of which 744,408 belonged Bitcoin clients Mt. Gox, and 100,000 Bitcoin - the company itself. Thus was lost 7% of all Bitcoin in the world, which at the time were estimated at more than $ 450 million. Later 200,000 Bitcoin suddenly "found" in one of the purses Mt. Gox.

For people who knew firsthand how the Exchange, this turn was quite expected: hacks and leaks occurred in the past, but the leadership on security issues sad little attention. According to an independent investigation WizSec group, most of the money was taken out of the "hot purses» Mt. Gox in the period from 2011 to 2014. According to Roger Vera supporter Bitcoin, the Japanese stock exchange was "the worst governance in the world." American Wired Magazine also did not stint on criticism, calling the business Mt. Gox «disgusting combination of bad management, carelessness and amateurishness." In the summer of last year against the former executive director of the Mt. Gox Mark Karpeles was a criminal case on suspicion of embezzlement.

The shock of the scandal in the Bitcoin community were such that many were predicting the end of the Bitcoin industry as such. In 2014, when customers Mt. Gox learned about the extent of their losses, cryptocurrency only began to take public recognition and reputation such disaster could permanently undermine confidence even their supporters, as well as to put Bitcoin outlawed forever. Fortunately, this did not happen, but the leadership of Mt. Gox failed to keep afloat his company, littered with an avalanche of lawsuits. In April 2014 it began the process of bankruptcy in one of the Tokyo courts, continuing to this day.

KnCMiner - a short "flight to the Moon"

In the Swedish company KnCMiner was an outstanding start. At the beginning of the way it has managed to attract an investment of $ 32 million. The publication Business Insider UK included the miners in the top 21 most influential Bitcoin companies. Back in June 2015 KnCMiner has introduced a powerful new equipment Solar ASIC, which is hoped to entrepreneurs was significantly improve the efficiency of mining, but it was useless because of the double reduction of the price of one unit.

"We understand that to conceive it in Sweden was a risk. We would like once on the moon, and not some gray medium-sized businesses. We have to try his luck and attract serious investors. But do not come together ", - said the head of the company Number of Sam.

Early last year, the subject of the scandal was the quality of products and services KnCMiner. According to Swedish media reports, more than 100 customers of the company accused her of fraud, and filed a complaint with the Swedish authorities. According to the dissatisfied customers, called Titan for device of mining work badly and caused a fire, but the company refused to return the money for it. It was also reported that KnCMiner refused to communicate with the lawyers who represented the interests of the victims.

Swedish court ruled in favor of KnCMiner, dismissed the applicant's claims, but the miner is not saved: for the reasons mentioned above, the company was unable to cover its own costs. In addition, lawsuits filed by American customers miners, still considered by courts in the United States.

Cryptsy - how to lose $ 6 million

The failure is over and the work Cryptsy kriptovalyutnoy exchange, which ceased operations in January 2016. The reason was, according to the company, hacker attacks, which resulted in 13,000 lost Cryptsy Bitcoin and almost 300 thousand laytkoinov (more than $ 6 million to January's rate). This is actually the theft occurred as many as one and a half years prior to her announcement - July 29, 2014. Exchange Management then decided not to disclose the fact that a large leak cryptocurrency of custom "hot purses", trying to compensate for funds derived from its own reserves.

But could not make up for the loss of exchange. In October 2015 began to appear the rumors about the difficult financial situation of the exchange area: users have reported problems with the withdrawal of funds from their purses, placed on the stock exchange. But director Paul Vernon Cryptsy denied any financial difficulties for the company.

Exchange Management blamed the hacked site of one of the developers Lucky7Coin nickname. However, some customers exchange took a different view: they suspect that the funds were withdrawn and cashed by the owner of the stock exchange Paul Vernon and his ex-wife Lori Anne Netlz. Now they are the defendants in the trial in Florida.

The collective lawsuit against Vernon and his ex-wife claimed that the funds derived from Cryptsy, were cashed and spent for the purchase of villas on the coast Floridv cost of $ 1500000 and car Infinity QX80. this property is now imposed a temporary ban on the sale.

Bitcoin Foundation - weak link

Lost trust - can be described as a situation in which turned out to Bitcoin Foundation Fund. Established initially for the dissemination and promotion of Bitcoin, the fund was to serve as a liaison between the Bitcoin community and traditional industries and public authorities. But in fact it turned out that the company cope with this task and without the support of the fund, and the fund's monthly budget, estimated at $ 150,000, equal to the volume small kraudfandingovoy campaign begins kriptovalyutnogo startup.

The financial situation of Bitcoin Foundation has deteriorated in the last year and a half. First, the fund lost some of its funds because of the high volatility of Bitcoin. Secondly, greatly reduced the amount of donations that Bitcoin companies were sent to the non-profit organization. It was connected with the fact that the address of the organization is increasingly heard allegations of misallocation of funds. For the indignation of representatives of Bitcoin community caused by the information that the member of the Bitcoin Foundation Board of Directors Patrick Merck spent $ 12,000 to attend a seminar in London.

In October 2015 at a meeting of directors of the fund was made the assumption that the funds will be enough only to maintain the activities of the organization until March 2016. Donate funds fund had by members of the Board of Directors: Bruce Fenton head of the fund, as well as board members Bobby Lee and Brock Pierce made to the budget Bitcoin Foundation for $ 10,000 each. Also, the fund has received about $ 65,000 from the miners, who requested anonymity.

But the main contribution - the return of confidence in the industry - the fund has not received. The May letter addressed to Fenton Bitcoin core development, in which he called to intensify cooperation with the organization, it caused outrage among representatives of Bitcoin community. Without enthusiasm for the proposal treated in Bitcoin core development team: Peter Todd said that the Bitcoin Foundation - not the organization, "which would bind the people." "I would prefer to stay away from them", - he added.

After retiring from the post of the Executive Director of Bruce Fenton this post was a South African venture capitalist Lew Klaasen. It will have to solve a difficult problem: either to return the trust of the industry and attract investment, or follow the advice of some of the participants Bitcoin community and organizations cease to exist.

The DAO - tragedy "unwise" contracts

For a long time in the industry preferred to speak only about the advantages of decentralization: resistance to fraudulent schemes, reducing costs of mediation, a more transparent system of governance, where each member has a voice and is not lost during the voting. Genuine democracy.

Now known and the price of admission to this future paradise -. $ 60 million This is the amount lost (not yet final) due to defects in the code a decentralized autonomous organization The DAO, which earlier this year attracted about $ 150 million investment.

Smart contract was not such a "smart": he managed to outwit an attacker who exploited this vulnerability to The DAO architecture. June 17 from the main account of the organization 3.6 million tokens ether totaling nearly $ 60 million were withdrawn Formally kidnapper did not do anything illegal:. He took advantage of the functions provided for smart contract.

Now, developers are in a hurry Ethereum offer a variety of solutions: from "do nothing" to the temporary freezing of the fund (including those that have been removed to a safe account) and even cancel the transaction. The latter, however, although it may return the money, but will cause irreparable reputational blow to the entire industry. One of the advantages blokcheyna - the irreversibility of the transaction - would not be so absolute. And where you can go back down and change the rules of the game, there will always be a field for fraud.