Unmasking the Dark Side of Cryptocurrencies: A Comprehensive Look into Current and Emerging Financial Crimes

Cryptocurrency fraud has become a significant global concern, with increasing reports of scams and losses. However, a comprehensive study on the potential of cryptocurrencies for fraud remains elusive. This article provides an in-depth exploration of various types of cryptocurrency fraud and offers definitive descriptions based on a thorough review of academic research and grey literature.

Methodology

The research followed the PRISMA-ScR protocol, using eligibility criteria based on language, publication type, relevance to cryptocurrency fraud, and quality of evidence. The initial search resulted in an analysis of 391 academic records and 53 grey literature records.

Findings from Academic and Grey Literature

Two separate scoping reviews were conducted – one based on academic literature and the other on grey literature. Academic literature identified 29 distinct types of cryptocurrency fraud. However, grey literature discussed an additional 13 types, bringing the total to 42 unique fraud types.

Prevalent Cryptocurrency Fraud Types

1. Ponzi schemes and high yield investment programs: These schemes, wherein early investors receive returns using the capital contributed by later investors, are the most common types of cryptocurrency fraud across all literature (Academic and Grey).

Emerging Cryptocurrency Fraud Types

Based on expert consensus during interviews and surveys, the following fraud types are perceived as the most potential and profitable threats in the cryptocurrency domain:

1. Pump-and-dump schemes: In these scams, fraudsters artificially inflate the price of a cryptocurrency by spreading misinformation, then sell their holdings, causing a sharp price decrease for other investors. Experts considered pump-and-dump schemes a less harmful form of fraud.
2. Ransomware: Cryptocurrencies are used as a primary payment method for ransomware attacks, where cybercriminals encrypt a victim’s data and demand payment for decryption.

Conclusion

The findings underline the importance of increased collaboration between sectors to effectively address cryptocurrency fraud. Standardized definitions and enhanced communication will be crucial in minimizing these threats.

Research in the field of cryptocurrency fraud is expected to continue evolving as new types of fraud emerge. Stay informed and protect yourself from these threats by staying updated on the latest developments in this area.