The Massive Scope of Cryptocurrency Fraud and Scams

Cryptocurrency fraud and scams may hit $4.3 billion in 2019


A blockchain security company, CipherTrace, reported on the large scale of cryptocurrency scams and hacks in the past several years.   These included over $125 million in stolen cryptocurrencies in the 2nd quarter of 2019, and $227 million lost to hacking in the first half of 2019.  It also included other scams, thefts and misappropriations totaling as much as $3.1 billion dollars.

On the heels of this comes a theft of $2.9 billion in deposits in an alleged scam involving a cryptocurrency exchange and wallet provider called PlusToken.   While six suspects allegedly affiliated with the scam have been arrested by Chinese police, the main operators of the scam are still out and running.  A loss of $2.9 billion would constitute the largest cryptocurrency exit scam to date.

CipherTrace estimated that cryptocurrency fraud and scams may reach $4.3 billion this year.


The Conditions for Fraud and Scams

As in all areas, criminals are attracted to opportunity and are deterred by risk.  The world of cryptocurrency is new, exciting and largely unregulated.  Investors don’t fully understand the product, and legal and technological protections are few.  This provides opportunity.

Similarly, the lack of strong regulatory schema worldwide, the proliferation of cryptocurrencies, ICOs, and exchanges, and the still not-fully-developed ability of law enforcement to catch the perpetrators, combine to minimize the risks to those who want to perpetrate cryptocurrency-related scams and crimes.

These factors make the circumstances ripe for cryptocurrency-related crime.





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