Experts Warn of Burgeoning Financial Crimes in the Virtual Currency Realm
In the ever-evolving world of digital currency, financial crimes have gained increasing attention as a major concern for governments and regulatory bodies worldwide. This article provides an overview of a comprehensive review examining the current state of knowledge on various forms of cryptocurrency fraud and identifies potential future threats.
Background: Rise of Cryptocurrency Fraud
As digital currency usage and adoption continue to grow, so do the potential risks associated with financial crimes in this realm. In the peer-reviewed journal Crime Science, Arianna Trozze and her team of experts present a scoping review on cryptocurrency fraud. The research involved a thorough analysis of academic literature and grey literature, carefully filtering through a vast pool of records to find key insights.
47 Unique Types of Cryptocurrency Fraud
According to the research, there are now 47 unique types of cryptocurrency fraud identified. The most frequently discussed forms of fraud across all literature include Ponzi schemes and high-yield investment programs. academic publications and grey literature revealed a total of 29 and 32 distinct types, respectively.
- Ponzi schemes - A fraudulent investing scam promising high returns with little risk to new investors by paying earlier backers with capital contributed by newer investors
- High-yield investment programs (HYIPs) - Similar to Ponzi schemes, a HYIP is an investment program that promises high returns with little risk, usually in a short time
Most Profitable and Feasible Threats
A high-profile 1.5-day expert consensus exercise brought together representatives from the private sector, government, and academia to discuss the most profitable and feasible threats in the cryptocurrency fraud landscape. Besides Ponzi schemes and HYIPs, the experts identified pump-and-dump schemes and ransomware as the most profitable and feasible threats.
- Pump-And-Dump Schemes - An illegal manipulation of the price of a publicly traded stock or digital asset by artificially inflating the price through buying and selling
- Ransomware - Malicious software capable of encrypting data on a victim’s computer or network, making it inaccessible until a ransom is paid
Expanding Research on Cryptocurrency Fraud
The findings suggest that research on cryptocurrency fraud is rapidly expanding in both volume and breadth. However, closer collaboration across sectors and a consensus on definitions are needed to effectively address the issues identified.
Urgency to Collaborate and Mitigate Risks
The importance of understanding and addressing financial crimes in the virtual currency realm has been underscored by various regulatory bodies and law enforcement agencies worldwide. As the usage and adoption of virtual currencies continue to grow, further research and collaboration among experts, regulatory bodies, and law enforcement agencies are crucial to mitigate the potential risks.