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Crypto’s Most Controversial Projects

Posted on 6/19/2021 by Robert

Cryptocurrency has never lacked for controversy or drama. Since the emergence of cryptocurrency in 2009 there have been more than a handful of projects which have drawn criticism. While some have recovered or done well from their brushes with notoriety, there are others which have been consumed by it. Here we look at some of the most controversial projects ever to grace the blockchain market.

Centra Tech

In 2017, Centra Tech successfully raised $25 million by promising to build a crypto credit card - the ‘Centra Card’ - that would turn cryptocurrencies into dollars at point of sale. Centra Tech wowed investors with a slick marketing campaign featuring celebrity endorsements from DJ Khaled and Floyd Mayweather Jr, partnership agreements with MasterCard and Visa, and licencing agreements to operate in 38 states. Their CEO Michael Edwards was described as, “an executive with over 20 years’ experience in banking and a Master’s in Business Administration from Harvard University.”

In reality, no such partnerships or state licencing agreements were ever signed, and CEO Michael Edwards didn’t exist. The real individuals behind Centra Tech were Sohrab Sharma, Robert Farkas and Raymond Trapini. All three were arrested in 2018 and found guilty of securities fraud. Sharma, who had a history of similar offences, was sentenced to 8 years in prison for his part .

As for celebrity shills DJ Khaled and Floyd Mayweather Jr, they never acquired the $50,000 and $100,000 they were promised for promoting Centra Tech. Instead they received the less welcome gift of considerable fines from the SEC. In total Khaled paid $153,000 for his part in the scandal and Mayweather, a repeat offender who promoted a number of fraudulent ICOs during the boom, was forced to hand over $615,000. To date, promoting dodgy ICOs remains the second most embarrassing thing Mayweather has ever done for money, coming a close second to surviving 8 rounds in the ring against professional YouTube idiot Logan Paul.

OneCoin

In 2015 OneCoin billed itself as the “bitcoin killer” . It wasn't to be the last nonsense statement issued by the company. OneCoin’s founder, Dr Ruja Ignatova, was a woman with a flair for the dramatic sales pitch. After all, when you consider the fact that bitcoin was created by anonymous bassment lurker Satoshi Nakamoto, the brilliant Dr Ignatova, a Mckinsey consultant with a degree from Oxford, could surely do better.

Ignatova’s OneCoin had a very simple business model. Investors in OneCoin could earn money in fiat by convincing other people to buy OneCoins. These new OneCoin owners would then go on to recruit more OneCoin buyers and so on, selling OneCoin and its “training materials” to ever more people. The first thing you need to understand about this kind of multi-level business opportunity, is that while it might sound a lot like a pyramid or ponzi scheme, it absolutely isn’t a pyramid scheme. The second thing you need to know is, that a pyramid scheme is exactly what it is.

In total it is estimated that OneCoin raised $4 billion before authorities closed in on Dr Ruja Ignatova. Then, like Keyser Soze, she vanished . To this day what happened to Dr Ruja Ignatova remains a mystery. Is the brilliant doctor sunning herself on a remote desert island, enjoying her ill-gotten gains by doing nothing all day except for sipping on cocktails, or has she become part of the cement foundation work for a union-constructed tower block? No one knows - or at least no one that knows is talking about it.

HEX

HEX markets itself as the first blockchain certificate of deposit, marketed by its flamboyant founder Richard Heart, the owner of the most famous candelabra in crypto. In return for high APYs of up to 40%, users are encouraged to lock ETH in HEX smart contracts for years. Some of these contracts are 10-15 years in length with users promised, “perpetual passive income”. 

With the promise of high interest returns, the requirement to lock another asset into the platform, and a quirky yet charismatic founder, HEX is one of those projects which instantly rings alarm bells for seasoned crypto owners. The house of cards has yet to fall, but that doesn’t make this project any less controversial.

Bitconnect

In the memory of many a crypto user, Bitconnect outgrew its status as one of the sector’s worst ponzi schemes to become something else: the greatest meme to ever hit the cryptosphere. That has less to do with Bitconnect itself and more to do with the unique presentational style of one Carlos Matos. First, some history on Bitconnect.

Bitconnect emerged in 2016, claiming to have created a bitcoin trading bot that could make huge profits from trading bitcoin, and huge profits for Bitconnect customers. Spoilers: they lied. Users who locked their bitcoin into the Bitconnect trading bot would receive Bitconnect in return, granting the user a share of all profits the bot made from trading. Bitconnect was guaranteed to make money, and the more money you locked into the bot and the longer you locked it, the more money you would make. Even better, Bitconnect had an affiliate program that would allow you to recruit friends so you could grow the pyramid higher. As of July 2017 Bitconnect was one of the world’s top 20 cryptocurrencies with a market cap of $1.43 billion .

In October of 2017, Bitconnect held their first (and last) annual conference. Of the speakers at the event the one who stood out was Carlos Matos, who wowed the crowd with his quirky charisma and an unbridled enthusiasm for all things Bitconnect. Matos announced his arrival at the conference by bounding onto the stage and singing, “Hey, hey, hey,” before yelling, “Wassa wassa up bitconeeeeeeeeect!”  

It was a bizarre and unintentionally hilarious performance that will live in the annals of crypto infamy. Not everyone was won over by Matos however, as he freely admitted to the crowd, "My wife doesn't believe in me". Refusing to take her advice that bitconnect was a scam Matos remained invested in the project. By early January of 2018 the market cap of Bitconnect reached $2.8 billion . On January 17th Bitconnect shut down forever and the market price of its token crashed by 92%. Matos later claimed he had lost $100,000 on Bitconnect and that his wife still doesn’t believe in him.

Bitcoin

The coin that started it all. Bitcoin can make multiple claims to being the most controversial crypto project of all time, but while other names on this list garner controversy for being fakes or scams, bitcoin gains controversy by being the real deal. As the world’s first working cryptocurrency, bitcoin has been at the vanguard of the blockchain sector, rustling the jimmies of governments, regulators and central banks all around the globe. 

Attempts by individuals to control the future direction of travel for bitcoin have also proved to be a source of great animus within the industry. Bitcoin (BTC) has had multiple forks over the years but few have been as controversial as Bitcoin Cash (BCH) led by ‘bitcoin Jesus’ Roger Ver, and Bitcoin Satoshi’s Vision (BSV) led by gambling mogul Calvin Ayre and the man who claims to be Satoshi Nakamoto, Craig Wright. Roger Ver is the owner of bitcoin.com and an outspoken critic of the handling of BTC. Thanks to the billionaire backing of Ayre, Wright has become one of the most litigious people in blockchain. While Blockstream developers such as Adam Back will tell you that the only real bitcoin is BTC, BCH and BSV backers argue otherwise.

The war of the three bitcoins is just another reason why the original crypto, which has proven highly reliable over the course of the decade, remains one of the most controversial of cryptocurrencies.