Cryptocurrencies as lottery tickets to riches.

With the run-up in Bitcoin in 2017, it's exploded in popularity since 2020

The cryptocurrency market has seen a rapid rise in recent years, especially with the run-up in Bitcoin to over $69,000 in 2021. This surge in value has been accompanied by an escalation in crypto scams and scandals, highlighting the risks inherent in this nascent industry.

As the Federal Reserve prepares to raise interest rates, there is an anticipation of a downturn in the stock and crypto markets. This potential downturn could be exacerbated by the crypto winter that commenced in 2022, which has already seen several crypto firms encounter difficulties and some cases, collapse entirely.

The crypto market has seen its fair share of scams and scandals throughout its history. These scams can take various forms, from rug pulls, where crypto creators simply leave with the money that’s been invested in their crypto project, to phishing scams and other online deceptions.

Here are five of the largest crypto scandals.

Binance crypto exchange, is being sued by the SEC for allegedly operating unregistered exchange and derivatives programs. The complaint, filed on Monday in federal court in San Francisco, names Binance and its CEO, Changpeng Zhao, as defendants.

The SEC alleges that Binance and Zhao raised billions of dollars from U.S. investors in its crypto exchange and derivatives programs without registering with the agency. The agency also claims that Binance commingled customer funds and used them for its own purposes, and that Zhao lied to the SEC about Binance’s ability to process trades quickly and efficiently.

Binance and Zhao are also being sued by the Commodities Futures Trading Commission (CFTC) for allegedly defrauding investors and engaging in other illegal activity. The CFTC’s complaint, filed on March 12, 2023, alleges that Binance violated federal commodities law by operating a futures exchange without registering with the agency and by engaging in other illegal activity.

The SEC’s complaint is part of a broader crackdown on the crypto industry by the agency. In recent months, the SEC has sued several other crypto firms, including BlockFi, Coinbase and Paxos. The agency is also investigating several other crypto companies.

The SEC’s complaint is still pending and could be settled out of court. If the case goes to trial, it could take several years to be completed.

In November 2023, Binance agreed to plead guilty to a variety of crimes and will pay more than $4 billion in penalties as part of a settlement with the Justice Department, the sources said. The charges stem from Binance’s alleged violations of the Bank Secrecy Act and failure to register as a money-transmitting business, two offenses that could have brought a hefty prison sentence to Binance executives. As part of the deal, Binance will pay the penalties and cooperate with the Justice Department’s investigation. The statement of facts filed by the Justice Department on Monday also noted that Binance will continue to be monitored by the Treasury Department in order to ensure compliance with the terms of the settlement.

The charges against Binance come amid a broader crackdown by U.S. authorities on cryptocurrency firms for alleged crimes. Last month, the Commodities Futures Trading Commission sued Binance and its CEO, Changpeng Zhao, for allegedly defrauding investors and illegally operating a commodities exchange.

Binance, which is one of the world’s largest cryptocurrency exchanges, was founded in 2017 by Changpeng Zhao. The exchange processes billions of dollars in cryptocurrency transactions each day and has millions of users worldwide.

The Justice Department’s charges against Binance are still pending and could be settled out of court. If the case goes to trial, it could take several years to be completed.

Coinbase is being sued by the SEC for allegedly selling unregistered securities to investors. The SEC claims that Coinbase’s crypto staking program is also an unregistered offering of securities.

Coinbase, one of the largest cryptocurrency exchanges in the U.S., has been a target of the SEC’s scrutiny for some time. The agency has been increasing its focus on the crypto industry in recent years, as it seeks to apply decades-old securities laws to a rapidly evolving sector.

The SEC’s complaint is still pending and could be settled out of court. If the case goes to trial, it could take several years to be completed.

The SEC sued crypto lender BlockFi in March 2023 for allegedly offering unregistered securities to investors. The agency claims that BlockFi’s interest-bearing accounts, which paid out interest to investors who deposited cryptocurrency with BlockFi, were unregistered securities. The SEC is also investigating BlockFi for possible violations of the Bank Secrecy Act.

BlockFi, which is one of the largest crypto lenders in the U.S., filed for bankruptcy in November 2022 after encountering difficulties in the wake of the crypto winter that commenced in 2022. The lender is currently being monitored by the Treasury Department to ensure compliance with the terms of a settlement reached with the SEC in January 2023.

The SEC’s complaint against Block