Watch Out: Crypto Horror Stories You Must Know for Halloween

As we may know, the crypto industry is filled with some real horror stories. The saddest part is that most of them were, actually, avoidable horror stories. If only the main characters knew! Like the classic star in a movie that should have never gone to that suspicious cabin in the forest. They should have never invested in that platform, left their private keys unattended, or bet for that price.

Fortunately, we can now celebrate Halloween by delving into the eerie and enlightening world of past crypto horror stories, learning from their mistakes. Let's take a spine-chilling but educational journey through these tales.

The Betrayal(s)

We’ll start with some backstabbing here because we usually trust in the wrong person. And we don’t mean strangers on the Internet, but your own family and friends. At least that’s what happened to an old man in Washington when his own son offered him a spiked cup of tea and proceeded to rob him of $400,000 in cryptocurrencies. The major irony here is that it was the same son who introduced the father to crypto investments.

In 2022, Liam Ghershony, 24, decided that his father wasn’t following the best investment strategy. He visited the father and offered him a cup of tea that contained a large dose of benzodiazepine, a kind of depressant that produces sedation and hypnosis. The father Ghershony was knocked out almost immediately after drinking the tea, and the son used the two-step authentication with his phone to steal from his digital wallet.

The young Ghershony thought his father would wake up soon, but that didn’t happen for two days. Someone called the Police to check on him, and they found him in the same spot, with severe dehydration and organ dysfunction. He was rushed to the hospital, and his son was quickly arrested. Yikes. At least, the father recovered (and also recovered his coins), while the son apologized and just spent some months in jail.

Another betrayal story happened in Manhattan, in 2017. Louis Meza targeted a supposed friend who held a millionaire Ethereum wallet. After luring the victim into an Uber-like minivan, they were kidnapped and robbed of their physical possessions, house keys, ETH seed phrase, and wallet location. While the friend was detained, Meza and accomplices looted the victim's apartment, making off with $1.8 million in ETH. Fortunately, the victim managed to escape, leading to the criminals' arrest, with most of the stolen crypto recovered.

Loose lips (and posts) sink ships

It’s very important not to go around making a fuss about your holdings. You know, loose lips might sink ships, and this has been proven by several crypto investors over the years. In 2021, a man from the Netherlands suffered a serious assault after, somehow, criminals heard about his crypto holdings and found his address. Three men arrived at his home disguised in green jackets, pretending to be troubleshooters.

Pretty soon, they were hitting him to force him to reveal his passwords and private keys. They went straight for the cryptocurrencies, and as the victim declared, “They literally beat the code out of me.” He also admitted that he’d been talking about his crypto holdings with numerous people around him, so, the criminals likely learned about it this way. The three men fled the scene, but the coins were frozen in the exchanges.

https://youtu.be/tbPNNEP20pg?si=biczVj7BpNah__eT&embedable=true

That one is far from being the only case, though. Again in 2021, this time in England, a criminal gang kidnapped a 14-year-old boy after learning (through social media posts) that he made a significant amount of money by investing in cryptocurrencies. At least, they only managed to extort around $1,000 from the boy’s mom before releasing him; and one of the kidnappers was tracked and arrested days later.

More crypto assaults

In 2020, the crypto trader Kieran Hamilton from Manchester wasn’t that lucky. He posted a lot of photos on Instagram, showing a luxurious life from his crypto investments. As a result, some criminals found him, beat him badly, and stabbed him while demanding money. The criminals didn’t know about how crypto works, so Hamilton managed to keep his private keys. However, they left with several electronics and his beloved dog.

These are barely some examples of crypto assaults. The security firm ADT discovered that 78% of burglars resort to social media to find victims. So, be pretty careful with the things you share publicly.

A bet is a bet

Sometimes, bad people are responsible for your disgrace. Some other times, you are the sole responsible for it. And this is especially applied in the world of cryptocurrencies. Indeed, there’s a whole Twitter (X) account dedicated to anonymous confessions (often mistakes and bad bets) by average crypto investors worldwide. It’s called “Coinfessions,” and we can learn a lot from them.

For instance, one of the latest confessions talks about how a crypto investor put their inheritance in crypto, earned a lot from it, but also lost a lot and ended up with the same amount. Likely, because they have no financial planning at all.

https://twitter.com/coinfessions/status/1716031699862364603?embedable=true

There are worse stories, though. People who have bet all their money and more (through loans) into cryptocurrencies, or worse, crypto exchanges like the infamous FTX. An anonymous investor had $650,000 before the FTX crash, but now they’re living paycheck to paycheck without savings, and taking loans to pay for medical bills.

https://twitter.com/coinfessions/status/1715669308381208879?embedable=true

BlockFi, another failed platform, is the star in another sad story by a soon-to-be medical student. They transferred all their savings to that platform, and the money was meant to pay for medical school. When they tried to withdraw their investment in November 2022, they just couldn’t. Now, at least, BlockFi announced that they’ll repay their users in 2024.

https://twitter.com/coinfessions/status/1714219773922574457?embedable=true

The main lesson to learn here is, likely, that you should never fully trust centralized platforms and wallets. Always use non-custodial services, where you keep your own private keys and have control of your funds all the time. Also, research thoroughly before putting your coins in a project or platform.

Maybe a zombie

People may fake their own death due to numerous reasons, but money is often involved. That’s when they’re really alive somewhere, of course, and the fake death isn’t just another conspiracy theory. We can’t know that for sure in the case of Gerald Cotten, the founder and CEO of the now-extinct Canadian crypto exchange Quadriga.

Cotten has been officially dead since 2018, but former Quadriga users are trying to legally exhume his body to prove that he’s really dead. The thing is that Quadriga is now considered a Ponzi scam, and it owes around $190 million in cryptocurrencies to over 115,000 customers.

Cotten's death, in India, was attributed to complications from Crohn's disease, an illness not typically fatal. Skepticism abounded, particularly when it was revealed that he was the sole possessor of the private keys to the exchange's cold wallets. However, known cold addresses of the exchange were found empty in an explorer. Adding to the intrigue, Cotten's death certificate misspelled his name, further fueling suspicions.

Some people speculated that Cotten may have faked his own death as part of an exit scam, while others raised questions about Quadriga's financial operations, suggesting it might have been a Ponzi scheme all along. Cotten's widow, Jennifer Robertson, was left grappling with these complex issues. She paid $12 million worth of assets after the scandal, declaring that she didn’t know about his husband's misdeeds.

To date, creditors are claiming over $303 million in losses, but they’ll only be given back 13% of it after bankruptcy proceedings. It’s unlikely that they’ll receive more, as one of the trustees declared. Most of it just disappeared after Cotten’s death, after all. \

A nightmare before private keys

Taking good care of your private keys is the first and most important lesson you should learn in crypto. Did you know that up to 3.7 million bitcoins are forever blocked because people keep forgetting or losing their private keys? And that’s just in Bitcoin. Non-custodial money means that only you have access to and control of your funds. If you lose your keys, nobody can recover them for you.

That’s the sad story of James Howells, a British computer engineer who bought 8,000 bitcoins early, in 2013. The summer of that year started his nightmare when he threw out the wrong hard drive into the trash while cleaning his office. It was the hard drive that contained his private keys and Bitcoin wallet.

https://www.youtube.com/watch?v=7MBRgLEXLEE&embedable=true

Since then, Howells has been adamant about recovering his bitcoins. He believes the hard drive is buried somewhere in a landfill in Newport, South Wales. So, he’s been trying to get permits to excavate there, unsuccessfully so far. His last proposal (from 2022) is using an AI-powered mechanical arm to filter the trash and then check it manually in a nearby facility. All of this with the help of $12 million raised from a hedge fund.

What can we say? Mistakes were made. Another sad story about private keys in 2023 was starred by Ivan Bianco, a popular crypto influencer. He didn’t lose his private keys but showed them by accident (ironically) in a live streaming about his DeFi earnings. An opportunistic viewer was faster than him and stole around $60,000 in crypto assets.

Never show up or share your private keys! Also, put them on paper and hide them away. Don’t be a victim this or another Halloween.

Featured Vector Image by Freepik