Financial Crime World

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Cryptocurrency Fraud: A Growing Concern

A comprehensive review of literature on cryptocurrency fraud has identified a staggering 174 different types of scams, with experts warning that the lack of clear definitions and risk assessments poses significant challenges to tackling this growing problem.

The Scoping Study

The scoping study reviewed over 1,000 academic papers and industry reports, finding that while there is a wealth of research on the topic, many publications fail to provide clear definitions of the frauds they are discussing. This lack of clarity makes it difficult for law enforcement agencies, financial institutions, and other stakeholders to effectively mitigate these crimes.

Gaps in Existing Literature

The review identified significant gaps in the existing literature, with 17 types of cryptocurrency fraud only mentioned in public sector reports and four types of fraud specific to the public sector not documented elsewhere. To address these gaps, a unique “sandpit” exercise was held, bringing together 27 high-profile representatives from the tech industry, financial sector, international financial intelligence units, law enforcement agencies, and academic researchers.

Expert Consensus Exercise Highlights Challenges

The expert consensus exercise revealed several key challenges facing stakeholders in the field of cryptocurrency fraud:

  • Lack of clear definitions: Experts emphasized the need for clear, consistent definitions of the various types of cryptocurrency fraud to enable effective mitigation efforts.
  • Insufficient risk assessments: The review highlighted the lack of comprehensive risk assessments for many of the identified frauds, making it difficult to prioritize resources and develop effective strategies.
  • Gaps in existing literature: The exercise underscored the need for further research on specific types of cryptocurrency fraud, particularly those only mentioned in public sector reports.

What’s Next?

The findings from this scoping study and expert consensus exercise will inform future research and mitigation efforts aimed at tackling the growing problem of cryptocurrency fraud. Key recommendations include:

  • Developing clear definitions: Experts urge for the development of clear, consistent definitions of the various types of cryptocurrency fraud to enable effective mitigation efforts.
  • Conducting comprehensive risk assessments: The need for comprehensive risk assessments for many of the identified frauds was emphasized, with experts highlighting the importance of prioritizing resources and developing effective strategies.
  • Filling gaps in existing literature: The exercise underscored the need for further research on specific types of cryptocurrency fraud, particularly those only mentioned in public sector reports.

Conclusion

By addressing these challenges, stakeholders can work together to mitigate the growing problem of cryptocurrency fraud and protect individuals and organizations from these increasingly sophisticated scams.