Exit-Scam – Fraud

An exit scam is generally understood to be a type of fraud in which, for example, a company collects advance payments for ordered goods or services during ongoing business operations without providing the agreed consideration and disappears from the market with the customer funds after some time.

In the cryptocurrency sector, this means that money or coins deposited by investors are simply stolen by the provider of the site or exchange. Exit scams are one of the most common fraud schemes in the cryptocurrency space.

A well-known example is Coinroom Exchange, whose initiators went underground overnight in 2016 with the money deposited by investors. Until then, Coinroom was the most widely used digital asset exchange in Poland. Interestingly, Coinroom already formulated very complex rules in the user agreement that every customer had to sign when opening an account, which stated, among other things, that initiators could withdraw investors’ money after an announced 24h period.

In 2021, the case of Africrypt has become public, according to which a pair of brothers is said to have gone underground with 69,000 Bitcoins. A few weeks earlier, they had informed their investors that the platform had been hacked. However, investigations revealed that there was no outside attack (see [15]). QuadrigaCX is a special case. Where pretty much all forms of fraud come together here. Gerry Cotton, who was declared dead, owes about 76,000 users the sum of about 214.6 million Canadian dollars. The full extent of the fraud has meanwhile been investigated in 5 reports by Ernst & Young (see [9]). Another example is Bitsane, a Bitcoin exchange from Ireland or the Polish Bitcoin exchange Bitmarket.