In 2023, cryptocurrency crimes shot up to $22 billion, a record-breaking feat. This was four times more than in 2022, when there were $4.3 billion worth of crypto scams. A large portion of these scams does not stem from the US. The most common locations where scams occur are Russia, Ukraine, and China. Crypto theft, scams, ransomware, and Ponzi schemes thrive in these locations.
One study shows that more than eighty-nine percent of crypto scams are carried out outside of the US. One reason for the high number of crypto crime cases in these locations is that regulations on online currency are not firm.
This article highlights the key areas of crypto crime and the impact of cryptocurrency in inducing potential criminal behavior. Besides reading this guide, if you are a victim of a scam, consult professionals like Securities Fraud Attorneys to get the best advice.
Statistics on Cryptocurrency Scams
A study revealed that crypto theft accounted for thirty-eight percent of crypto crime. Crypto scams followed closely, with thirty-two percent. Ransomware and Ponzi schemes shared the remaining thirty percent.
Interestingly, the study revealed that crypto extortion rackets caused investors a $2 billion loss, an astronomical 128 percent increase from the previous year. Crypto fraud caused a $10 billion loss, a fifty-nine percent increase from the prior year.
The study further highlighted that many people now use cryptocurrencies for money laundering. Money laundering schemes using cryptocurrency accounted for two percent of the $22 billion loss recorded in the year.
Comparing Crypto Crimes to Other Types of Financial Crimes
According to one study, exchange and wallet services initiate crypto theft rather than individual user actions.
Furthermore, crypto crimes still rank low compared to other types of financial crimes. Credit card fraud is estimated to be worth more than $48 billion worldwide, while check fraud, on the other hand, stands at $20 billion.
Ways to Tackle Crypto Crimes
“Many investors are not prepared for financial crimes. They do not understand how to protect against crypto crimes,” says attorney Scott Silver of Securities Fraud Attorneys.
Financial experts have warned investors to exercise extra caution when using digital money platforms and exchanges and employ basic security measures, including not sharing important information online.
Regulators equally have a role to play. They must ensure that laws guarding against crypto-based crimes are stronger and that strict compliance with anti-money laundering laws worldwide is enforced.
Advantages and Disadvantages of Cryptocurrencies
With the alarming increase in crypto crimes, investment in digital currencies is becoming increasingly fragile daily. Digital currencies are now significantly riskier to invest in because they are affiliated with illegal activities.
Interestingly, although digital currencies are risky, there are numerous merits to investing in them. They are faster payment processing platforms than traditional banking systems, and there is also a greater level of transparency between the parties involved in the transaction.
However, while these benefits might look enticing, it is also important to be conscious of the risks. This is how people can make informed decisions about cryptocurrencies.
The Implication of Crypto Crimes on Investments
Cryptocurrency has a high potential to impact criminal behaviors this year. Due to its fragility, most hackers are constantly finding ways to exploit its vulnerabilities. They aim to exploit its weak cryptography protocols and lack of user authentication protocols.
However, these vulnerabilities can be avoided. First, the general public must be extensively educated on the best security practices regarding cryptocurrencies. This education is targeted at traders and investors.
This education may significantly decrease the rate of crypto crime this year. It can also stabilize the crypto market, and investors can trust the platforms as secure.
Final Words
Cryptocurrency is not as old as other forms of currency. As a result, there are many risks involved in trading or using it. Investors must thus be aware of these dangers.
Many criminal elements aim to exploit cryptocurrency vulnerabilities. To protect against them, regulators must ensure strict compliance with worldwide money laundering laws.
There should also be an emphasis on public education on crypto security best practices. When everyone is aware of the risks of cryptocurrency and is security-conscious, they can make the platform safer, ultimately decreasing crypto crimes.
