2023 was a year of reckoning for the crypto industry. While many hoped for a spectacular recovery after the previous bear market, the year threw harsh realities into the spotlight instead. Deteriorating markets, plummeting NFT valuations, and rampant cybercrime were just the beginning. A series of high-profile fraud cases perpetrated by influential figures shook the crypto world to its core, destroying trust and revealing how easily it could be for investors to fall victim to large-scale Fraud and “get rich quick schemes”.

In this article, we will delve into some of the biggest frauds and Ponzi schemes of 2023 and the big names who were behind them.

Sam Bankman-Fried, FTX Founder: The poster boy of crypto philanthropy, Bankman-Fried's FTX empire crumbled spectacularly, revealing a web of deceit and financial mismanagement. Convicted of stealing billions from his exchange, FTX, he now faces life imprisonment, a clear reminder of the potential for even the most seemingly successful figures to succumb to greed and corruption.
The SafeMoon Trio: Braden John Karony, Kyle Nagy, and Thomas Smith, the masterminds behind the "SafeMoon" token, saw their lavish lifestyles crumble when allegations emerged that they had diverted millions of investors money to fund their extravagant lifestyle. In November, Karony and Smith were arrested for allegedly defrauding investors by falsely claiming that no one could withdraw assets held in SafeMoon's liquidity pools. They serve as a cautionary tale against the hype and unrealistic promises that often plague the crypto industry.
Celsius Network Co-Founders: Alex Mashinsky and Roni Cohen-Pavon, who promised high returns with minimal risk through their lending platform, Celsius, now face accusations of misleading investors and orchestrating a Ponzi scheme. An Investigation by an independent examiner for the U.S. Bankruptcy Court revealed that Celsius Network perpetrated a Ponzi scheme by using new customer funds to pay back old customers.
Do Kwon and Terraform Labs: The Founder of the algorithmic stablecoin "TerraUSD", Do Kwon, faces charges of securities fraud in South Korea after the Terra ecosystem's spectacular collapse, wiping out billions in investor wealth. His alleged manipulation and lack of transparency raise serious questions about the viability of algorithmic stablecoins.
Faruk Fatih Özer, Thodex Founder: Özer, a Turkish cryptocurrency trader, infamously fled Turkey in 2021 with billions in investor funds after his crypto exchange, Thodex, collapsed. He was arrested in Albania in 2022 and extradited to Turkey, where he was sentenced to a staggering 11,196 years in prison for fraud, market manipulation, and money laundering.
Avraham Eisenberg and Mango Markets: This "flash loan attack" in October saw Eisenberg exploit a loophole in the DeFi platform Mango Markets, manipulating the price of its native token to net himself a $116 million profit. While Eisenberg claimed it was a "white hat hack", his actions exposed vulnerabilities in DeFi protocols and raised questions about the security of decentralized finance.
Changpeng Zhao, Binance Founder: While not indicted, Changpeng Zhao, the founder of the world's largest crypto exchange, Binance, acknowledged his company's shortcomings in preventing money laundering. He pleaded guilty to a money laundering charge, leading to a $4 billion settlement for his company's failure to prevent illicit activity.

Cover Image source: Fortune and Forbes