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Cryptocurrency Fraud: A Review of the Literature
A recent review of 394 records identified 73 different types of cryptocurrency fraud, highlighting the need for a comprehensive understanding of these crimes. The review, which included articles from academic journals, public sector publications, and industry reports, found that few publications provided clear definitions of the fraud types or assessments of their level of risk.
Expert Input
To address this gap, a “sandpit” exercise was held with 27 high-profile representatives from the tech industry, financial sector, international financial intelligence units, law enforcement, and academia. The event aimed to elicit expert opinion on the identified cryptocurrency frauds, potential future threats, and challenges and opportunities in the field.
Types of Cryptocurrency Fraud
The review found that Ponzi schemes and HYIPs (High-Yield Investment Programs) were the most frequently discussed types of cryptocurrency fraud, appearing in 58.8% of public sector studies. Other common themes included:
- Undefined or general fraud and scams
- Mining malware
- Pump-and-dump schemes
Key Findings
• 73 different types of cryptocurrency fraud were identified in the review • Few publications provided clear definitions or risk assessments of the fraud types • Ponzi schemes and HYIPs were the most frequently discussed types of cryptocurrency fraud • Mining malware, pump-and-dump schemes, and undefined or general fraud and scams were also common themes
Implications
The review highlights the urgent need for more research into the nature and impact of cryptocurrency fraud. It also emphasizes the importance of effective law enforcement and regulatory responses to combat these crimes.
As the use of cryptocurrencies continues to grow, it is essential that policymakers, regulators, and law enforcement agencies develop a better understanding of the risks and motivations associated with these crimes. This review provides a critical foundation for future research in this area.
Recommendations
• Conduct further research into the nature and impact of cryptocurrency fraud • Develop more effective law enforcement and regulatory responses to combat these crimes • Improve definitions and risk assessments of the fraud types • Increase understanding of the motivations and behaviors of cryptocurrency users