Crypto Scams, Crimes & The Courts
In our previous blog it was highlighted that while digital assets offer exciting opportunities, they also demand vigilance, caution, due diligence, and legal awareness. This is due to the risks of cryptocurrency being used by bad actors to commit financial and other crimes. In this blog we will explore the darker side of cryptocurrency through high-profile crypto scams and court cases for you to appreciate why vigilance, due diligence and legal awareness are non-negotiables in the digital assets space.
Crypto companies, exchanges and their founders have been in the global news, and in courts worldwide, for crimes, financial crimes, poor governance, corporate shortcomings and many other reasons.
Notable scams or collapses involving crypto
Here are some notable scams or collapses involving crypto:
- Terraform: Terraform Labs PTE, Ltd. and Do Kwon were held liable for orchestrating fraud involving crypto asset securities which led to massive investor losses when the scheme unraveled.
- Thodex: This was Turkey’s first major crypto exchange. In 2021, they suddenly halted trading, preventing users from withdrawing their funds. The CEO disappeared and fled Turkey for Albania. Users were locked out of their accounts and feared that their money was gone. His disappearance triggered a criminal investigation and an international manhunt.
- FTX – This US/Bahamas, crypto exchange collapsed around 2022 on account of misuse of customer funds, accounting fraud among other charges and claims. As a result, there has been a range of court cases involving the founder, Sam Bankman-Fried and the exchange, even up to present day.
- Three Arrows Capital (3AC): The founder of 3AC, Su Zhu was arrested in 2023 for failing to co-operate with the liquidators of his collapsed crypto hedge fund. He was imprisoned for 3 months and was released. Three Arrows Capital Ltd is in liquidation and there has been a slew of cases flowing from this collapse including in the British Virgin Islands. These cases continue into 2025 and some of them involve the collapsed FTX crypto exchange.
- Pig Butchering Scam: A global scam that tricked hundreds of victims worldwide resulted in a $225 million seizure of cryptocurrency by the US Secret Service.
A few Court cases involving crypto
Additionally, here are a few court cases involving crypto:
- SEC v. Middleton et al – In this case the US SEC contended that the Defendants fraudulently raised millions of dollars in virtual currency from the unregistered sales of securities called “VERI” based on a series of false and misleading statements to potential and actual investors.
- Faruk Fatih Özer Case – The Thodex CEO, Özer and his 2 siblings were all sentenced to 11,196 years in prison for defrauding investors of millions of dollars. In 2025 a Turkish Court overturned part of the conviction against Özer and his siblings, dismissing charges related to starting an organization to commit a crime.
- Shrem Case – Shrem, the former CEO & Compliance Officer of BitInstant, a Bitcoin exchange company, and the former Vice Chairman of the Bitcoin Foundation, was sentenced to two years in prison for his role in knowingly transmitting nearly $1 million in Bitcoin intended to facilitate drug trafficking on “Silk Road” – a black-market website designed to enable users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement.
Given these circumstances, it must be reiterated that while there may be the enticing promise of fast wealth through digital currency, there is a dark side to this space. Bad actors operate in the crypto sector (as well as in the traditional finance sector) and vigilance, due diligence and legal awareness must be exercised when operating in both sectors.
If this information resonates with you; or you need legal assistance navigating this area, feel free to reach out at info@tenorequelegalandconsulting.com. You can also explore these resources – Crypto Crime Prevention Tips for Investors, 2025 Cryptocurrency Investigation in T&T, Top 10 Biggest Crypto Frauds, 3AC Case Update, Latest on the Thodex case, The Trinidad & Tobago Securities and Exchange Commission and the Financial Intelligence Unit of Trinidad and Tobago for more information.