Fraud is as old as commerce itself, but the rise of cryptocurrency has opened a new and rapidly evolving front in the battle against scams.
For those of you unfamiliar with cryptocurrency, I am looking at many of my parliamentary colleagues here, its potential is as exciting as it is revolutionary. In short, it introduces a new way of transferring value. It is also crucially decentralised, meaning it operates without a central authority like a bank, allowing for peer-to-peer transfers with increased transparency and security.
It’s not a case of if but a case of when we see this disrupting the traditional financial system, particularly with the return of a certain president Trump to the White House, reversing a previously hostile environment for the crypto community in the US. You need only to take a look at the price of Bitcoin to get a sense of how the community is feeling – bullish.
But we don’t need to look across the Atlantic to find evidence of the shifting sands. Closer to home, recent figures from the FCA show that 12% or 7 million citizens hold cryptocurrency and consumers are increasingly viewing it as part of ‘a wider investment portfolio’.
In short, the horse has bolted and crypto is here to stay.
Unfortunately, so is fraud. Where there’s money there’s scammers and cryptocurrency is now firmly in the crosshairs of bad actors who want your crypto cash. Unsurprisingly, as the market grows so does fraud – the market almost tripled in 2024 and stolen funds increased by approximately 21% to $2.2 billion, according to Chainalysis.
This trend is matched by an increasing sophistication of cyber criminals. Cryptocurrency scams have evolved far beyond the days of simple phishing emails. Today’s scammers are using advanced techniques that make these scams harder to detect, including increasing use of AI to carry out highly personalised sextortion attacks. New methods are bearing fruit for scammers, as 2024 saw a 56% increase in the number of large loss cases, with thirty high value thefts over $1 million.
These criminals operate from all corners of the globe, masking their VPNs to make it challenging to track them down and bring them to justice. Take North Korean hackers who are stealing more from crypto platforms than ever before, $1.34 billion in 2024, or 61% of the total amount stolen for the year.
Concerningly, 1 in 5 Brits using cryptocurrency are also under the impression they will receive financial compensation if scammed by these bad actors. They will not. And let’s not forget that behind each scam is a victim, usually an ordinary person, lured in by sophisticated tactics, who is left scarred by the experience and facing financial ruin, stress and mistrust.
But there is no need to throw the baby out with the bath water here. The bottom line is that new technologies, especially those born from the internet, often face security challenges in their earliest days. As adoption grows, industry participants learn from each incident and security improves.
Fortunately, the market is responding with innovation of its own. Companies like M2 Recovery for example offers a lifeline with insurance that covers the costs of the burdensome track, trace and legal fees for victims to get their cryptocurrency back.
Ultimately, there is no better replacement than not being scammed at all and knowledge will always be the best deterrence. The more informed you are, the harder it is for scammers to take advantage.
As this revolutionary technology evolves those 7 million UK citizens must remain vigilant.
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Source: Politics
