Cryptocurrencies and future financial crime

Abstract

Background Cryptocurrency fraud has become a growing global concern, with various governments reporting an increase in the frequency of and losses from cryptocurrency scams. Despite increasing fraudulent activity involving cryptocurrencies, research on the potential of cryptocurrencies for fraud has not been examined in a systematic study. This review examines the current state of knowledge about what kinds of cryptocurrency fraud currently exist, or are expected to exist in the future, and provides comprehensive definitions of the frauds identified. Methods The study involved a scoping review of academic research and grey literature on cryptocurrency fraud and a 1.5-day expert consensus exercise. The review followed the PRISMA-ScR protocol, with eligibility criteria based on language, publication type, relevance to cryptocurrency fraud, and evidence provided. Researchers screened 391 academic records, 106 of which went on to the eligibility phase, and 63 of which were ultimately analysed. We screened 394 grey literature sources, 128 of which passed on to the eligibility phase, and 53 of which were included in our review. The expert consensus exercise was attended by high-profile participants from the private sector, government, and academia. It involved problem planning and analysis activities and discussion about the future of cryptocurrency crime. Results The academic literature identified 29 different types of cryptocurrency fraud; the grey literature discussed 32 types, 14 of which were not identified in the academic literature (i.e., 47 unique types in total). Ponzi schemes and (synonymous) high yield investment programmes were most discussed across all literature. Participants in the expert consensus exercise ranked pump-and-dump schemes and ransomware as the most profitable and feasible threats, though pump-and-dumps were, notably, perceived as the least harmful type of fraud. Conclusions The findings of this scoping review suggest cryptocurrency fraud research is rapidly developing in volume and breadth, though we remain at an early stage of thinking about future problems and scenarios involving cryptocurrencies. The findings of this work emphasise the need for better collaboration across sectors and consensus on definitions surrounding cryptocurrency fraud to address the problems identified.

Problematic Trading: gambling-like behavior in day trading and cryptocurrency investing

“…In general terms, cryptocurrency represents a relatively new technology in finance, being defined as a decentralized digital currency, which is based on technologies such as cryptography and blockchain, allowing for financial transactions between two parties in anonymity and without the need for intermediary financial institutions. [15][16][17] Bitcoin, invented in 2008 by Satoshi Nakamoto (a pseudonym representing a person or group of people who signed the paper "Bitcoin: A Peer-to-Peer Electronic Cash System") which is the most known cryptocurrency, is only one of the thousands of different digital coins that exist. 16,17 The cryptocurrency industry is growing rapidly with huge increases in market capitalization over the past decade.…”

“…[15][16][17] Bitcoin, invented in 2008 by Satoshi Nakamoto (a pseudonym representing a person or group of people who signed the paper "Bitcoin: A Peer-to-Peer Electronic Cash System") which is the most known cryptocurrency, is only one of the thousands of different digital coins that exist. 16,17 The cryptocurrency industry is growing rapidly with huge increases in market capitalization over the past decade. 16 Several reputable companies and major banks started accepting cryptocurrency as valid payment and financial transactions method; in addition, recently there has been a discussion about the role of cryptocurrency payments in healthcare economics, ranging from the payment of outpatient appointments to surgical and other medical procedures.…”

Financial cybercrime in the Islamic Finance Metaverse

“…In a simple example, hostage-takers may receive the ransom amount in bitcoin, which can be easily stored and exchanged on the global cryptocurrency market without the ability of authorities to trace the transactions. Furthermore, as the bitcoins are not uniquely identifiable in the blockchain, this further makes these transactions and what was conducted with the received bitcoins impossible to trace [17]. This lack of transparency and anonymity for transacting parties represents an encouragement for criminals to engage in crimes.…”

Eth-PSD: A Machine Learning-Based Phishing Scam Detection Approach in Ethereum

“…Recently, blockchain has attracted many researchers and investors regarding the significant changes in essential fields such as politics, finance, and science [1]. Nowadays, one of the most critical and challenging blockchain applications is cryptocurrency [2]. Bitcoin was the first practical implementation of cryptocurrencies [3].…”