Crypto Fraud Risk Rises With Adoption

June 2024

As covered in a recent post, the need for regulation in the crypto industry grows as the price of crypto draws more people. The risk of fraud when dealing with crypto is a significant area of concern for both users who need to be able to navigate a space safely and companies seeking to grow their businesses in a secure environment; the only people who benefit from a lack of regulation are criminals.

In its Internet Crime Report 2023, the FBI published findings which indicated that the danger of crypto fraud and scams were still very real despite the work that has gone into combating them over the past few years. The report noted that: 

  • Investment fraud related to crypto rose by more than 50% from 2022 to 2023.
  • There has been a spike in fraudulent crypto investment schemes
  • People have taken the guise of NFTs developers to scam others.
  • Data suggests fraudsters are increasingly using custodial accounts held at financial institutions for cryptocurrency exchanges or third-party payment processors.
  • It is important to use two-factor or multi-factor authentication as an additional security layer and to have adequate verification processes. 

The FBI has also focused on other areas of risk in the crypto ecosystem, including in Play-to-Earn games and crypto recovery scams.  

Beyond obvious measures such as people checking people or businesses they’re interacting with, keeping personal information safe, and avoiding opportunities that sound ‘too good to be true’, there are a number of ways in which those involved in the crypto space can keep themselves safe. Advice which can be taken from the report includes: 

  • Create unique wallets to use to isolate funds for different uses. 
  • Being wary of companies using vague language or with a minimal online presence.
  • To watch out for Phishing and Spoofing scams - the most common types.

Older people were found to be most at risk from fraud, but the genuine potential of crypto seems to be being used by criminals to perpetrate scams that promise lucrative payouts. In addition, time-sensitive opportunities are also potentially an indicator of scams which can be used by criminals in the crypto scene (and beyond) who rush people to invest in a fake opportunity. 

In order to make sure the crypto space is secured against the sort of fraudsters and other criminals that the FBI report warns of, Blockpass has created numerous regulatory compliance products to verify the identity of businesses and individuals in an efficient and effective way so that anyone can interact with the knowledge that they’re dealing with a legitimate person or opportunity. By ensuring KYC and AML standards throughout, Blockpass safeguards against criminals from engaging with its ecosystem and provides a safe environment for people to do business in the most user friendly and least intrusive manner. 

With crypto growing in value and becoming more widespread, Blockpass’ solutions only become more necessary and indeed, as regulations become increasingly required and developed by jurisdictions around the world, Blockpass will keep up to date and provide the best solutions possible to ensure compliance and security for those that need it.

About Blockpass

Ditch tedious onboarding and say hello to seamless compliance with Blockpass, the ultimate turnkey solution for KYC, KYB, and AML. Experience the market's most efficient and cost-effective compliance suite, built by seasoned compliance veterans and crypto-natives. Automate compliance processes, eradicate fraud, and onboard globally with confidence. Verify businesses worldwide, launch bank-grade verification for your organization, and instantly activate compliant KYC/AML for DeFi, exchanges, token launchpads, NFT mintings and beyond. Through Blockpass’ decentralized network of a million pre-verified crypto-enthusiasts and a thousand pre-verified businesses, you can expand your reach effortlessly. Leverage Advanced KYC BotTM for intelligent remediation, On-Chain KYC® for data-free anonymity, and Unhosted Wallet KYCTM to meet Crypto Travel Rule regulations. Join Animoca Brands, Cardano, Polygon, Chainlink, Delta Exchange, National Geographic, TinyTap, Seedify, ChainGPT, Iskra and many more in partnering with Blockpass for compliance you can trust, growth you can accelerate and an experience you can enjoy. Join the cutting edge of secure, streamlined onboardings.

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