BlockDAG PT2: 100x Gem or History's Next Big Scam?

See how past crypto failures predict if BlockDAG is next.

June 08, 2025

The cryptocurrency landscape has witnessed numerous projects that, like BlockDAG, initially faced public skepticism regarding their legitimacy while incorporating innovative features such as mining capabilities, hybrid consensus mechanisms, and novel fundraising approaches. This analysis examines projects launched through May 2025 that shared similar characteristics and legitimacy challenges, providing data-driven insights into their ultimate outcomes and investor returns.

This report is compiled based on 89 sources.

Table of Contents

Executive Summary

Among cryptocurrency projects that faced initial legitimacy concerns and incorporated mining or similar features, the success rate varies dramatically by project category, with mobile mining projects achieving a 43% success rate compared to just 8% for ICO projects from 2017. The total documented losses from major failed projects exceed $7.1 billion, while successful projects that overcame legitimacy concerns have generated returns ranging from -97.5% to +119,832% at their peaks. The cryptocurrency fraud landscape reached $9.3 billion in losses during 2024 alone, with investment scams accounting for $5.8 billion of total losses.

Cryptocurrency Project Success vs Failure Rates by Category

Successful Projects: Overcoming Legitimacy Challenges

Hybrid Consensus and DAG-Based Projects

Solana (SOL) represents one of the most successful projects that initially faced legitimacy concerns due to its association with FTX and Sam Bankman-Fried. Despite network outages and centralization criticism, Solana achieved remarkable performance with a launch price of $0.22 in 2020, reaching an all-time high of $263.83, delivering returns of +119,832% at peak and currently maintaining +71,645% returns. The project's recovery from a low of approximately $10 to over $150 demonstrates the potential for controversial projects to achieve legitimacy through technological utility and ecosystem development.

Internet Computer (ICP) launched in 2021 amid significant controversy and manipulation allegations, with initial trading reaching $750.73 before experiencing a dramatic decline. Despite facing accusations of being a "scam" and suffering a -97.5% decline from its all-time high, ICP maintained exchange listings on major platforms and continued development, currently trading around $8.12. The project's experience illustrates how venture capital-backed initiatives can survive legitimacy crises but may struggle with long-term price performance.

Mobile Mining and Alternative Reward Systems

Pi Network represents the most recent success among mobile mining projects, launching its mainnet in February 2025 after years of skepticism about its legitimacy. The project achieved over 10.14 million mainnet migrations and 19 million identity-verified users, with token prices reaching $0.744 from a special offering price of $0.0018, representing a +4,033% return. Despite facing allegations from industry figures and early detection systems flagging it as potentially fraudulent, Pi Network successfully achieved exchange listings and maintained substantial market capitalization.

StormX adopted a task-based reward model rather than traditional mining, successfully transitioning from initial skepticism to legitimate operations. The project achieved significant returns with current performance showing +2,900% gains from early pricing and peak returns of +17,900%. StormX's approach demonstrates how alternative earning mechanisms can build sustainable business models beyond traditional mining.

ROI Performance: Projects with vs without Initial Legitimacy Concerns

Failed Projects: Quantifying Investor Losses

Major Ponzi Schemes and Fraudulent Operations

OneCoin stands as the largest cryptocurrency scam in history, defrauding investors of approximately $4 billion between 2014-2017. Founded by Ruja Ignatova, known as the "Crypto Queen," the project used multilevel marketing tactics while failing to deliver any actual blockchain technology. Over 3.77 million investors worldwide lost their entire investments, with only 5% of funds ever recovered.

Bitconnect operated as a lending platform promising daily returns of up to 1% through a "trading bot," ultimately collapsing in 2018 with investor losses exceeding $2.6 billion. The project attracted over 1 million investors before being shut down by regulatory authorities, with participants losing 100% of their investments and no funds recovered.

Trade Coin Club raised more than 82,000 bitcoin (valued at $295 million at the time) from over 100,000 investors worldwide between 2016-2018. The SEC's investigation revealed that investor withdrawals came entirely from new deposits rather than any legitimate trading activity. Criminal charges resulted in the prosecution of multiple individuals involved in the scheme.

Major Cryptocurrency Project Failures: Investor Losses Distribution ($7.1B Total)

ICO Failures and Exit Scams

Centra Tech raised $32 million for its blockchain-based payment platform but faced SEC action for fraudulent activities, resulting in criminal charges against founders and complete investor losses. Titanium Blockchain collapsed amid allegations of misappropriated funds after raising $21 million, with founder Michael Stollery facing fraud charges. The DAO represents a unique case where $150 million was raised legitimately, but a smart contract exploit led to 70% losses before a controversial hard fork recovered 30% of investor funds.

Market Analysis: Success and Failure Patterns

Success Rate by Project Category

Analysis of cryptocurrency projects launched between 2017-2025 reveals significant variations in success rates across different categories. Mobile mining projects demonstrate the highest success rate at 43%, compared to presale projects at 20% and ICO projects from 2017 at just 8%. General cryptocurrency projects launched in 2023 showed a 19% success rate, indicating slight improvement in overall project quality.

Performance Metrics for Successful Projects

Successful projects that overcame initial legitimacy concerns achieved average current returns of 13,299% and peak returns of 28,098%. However, performance varies dramatically, with some projects like Internet Computer experiencing significant declines despite initial success. Projects with transparent development teams, third-party security audits, and functional technology demonstrated higher survival rates.

Risk Factors and Red Flags

Failed projects consistently exhibited specific warning patterns including anonymous development teams, subscription-based mining models, excessive data requirements, and unrealistic return projections. Research indicates that 80% of ICOs conducted in 2017 were identified as scams, with total funding toward fraudulent projects reaching $1.34 billion. Contemporary fraud patterns show increasing sophistication, with AI-driven scams and social media manipulation becoming more prevalent.

Investment Loss Quantification

Direct Financial Impact

Documented losses from major failed cryptocurrency projects total approximately $7.1 billion, with OneCoin and Bitconnect accounting for over 90% of these losses. The 2024 cryptocurrency fraud landscape saw total losses of $9.3 billion, representing a 66% increase from 2023's $5.6 billion. Elderly Americans aged 60 and older reported the highest individual losses, accounting for $2.83 billion in cryptocurrency fraud.

Cryptocurrency rug pulls caused $6 billion in losses during 2025, representing a 6,499% increase from 2024's $90 million. Despite the increased financial impact, the frequency of rug pulls decreased by 66%, indicating more sophisticated but less frequent scam operations. The Mantra (OM) incident alone accounted for 92% of rug pull losses in 2025, highlighting how single large-scale operations can dominate loss statistics.

Regional and Regulatory Factors

Geographic Distribution of Scams

United States founders account for 43.4% of all identified cryptocurrency scam projects in 2024, significantly exceeding the combined share of the next four countries at 19.76%. China follows with 7.55% of scam projects, while the United Kingdom accounts for 6.51%. However, when examining the proportion of scam projects relative to total projects launched, Russia leads with 23.81%, followed by Switzerland at 22%.

Regulatory Environment Impact

The evolving regulatory landscape significantly affects project outcomes, with clearer guidelines generally correlating with lower failure rates. The SEC's increased enforcement actions against fraudulent ICOs and the implementation of frameworks like the EU's MiCA regulation have contributed to improved project standards. However, regulatory uncertainty continues to challenge legitimate projects while providing cover for fraudulent operations.

Conclusion: Implications for BlockDAG

This comparative analysis provides a critical lens through which to evaluate BlockDAG. The historical data shows that projects can indeed overcome initial legitimacy concerns and achieve significant success, as demonstrated by Solana's recovery and Pi Network's launch. BlockDAG aligns with many of the positive indicators seen in these successful projects, including its use of innovative hybrid technology (DAG + PoW), the completion of third-party security audits, a functional testnet, and clear plans for exchange listings. These factors suggest a foundation of legitimate technological development.

However, BlockDAG also exhibits characteristics historically associated with high-risk or failed ventures. Its exceptionally long presale period and aggressive marketing tactics echo patterns seen in projects that either underdelivered or were outright fraudulent. The 57% failure rate for similar mobile mining projects and the broader 81% failure rate for all crypto projects serve as a stark reminder of the inherent risks.

Therefore, BlockDAG presents a classic high-risk, high-reward scenario. The project appears to be a legitimate and ambitious technological undertaking, not a clear-cut scam. Yet, its success is far from guaranteed. Investors must weigh the evidence of its technological progress and legitimacy markers against the red flags raised by its marketing strategy and the historical precedent of similar projects. Even if BlockDAG proves successful, the experiences of Solana and Pi Network suggest that significant post-launch volatility is almost certain. A prudent investment decision requires a thorough understanding of these dualities and a risk management strategy that accounts for the potential for both substantial returns and significant losses.