Opinion: Cryptocurrencies have become a playground for fraudsters

By    28 Dec,2022

Currency speculation used to be the preserve of banking institutions, governments and investment funds. But with the advent of cryptocurrencies, it is being sold to the public as casino entertainment.


News involving cryptocurrencies and fraud is ubiquitous in the realm of white-collar crime (crimes committed using the convenience of office), and perhaps more worryingly, these fraudulent activities in the crypto realm are not limited to a single type of crime.

These crimes are diverse and different, but one thing in common is that real money is involved and cryptocurrency investors are the victims. Many people have invested their life savings in cryptocurrencies, and on a larger scale, private equity, and pension plans are the main investors and compromised.

There are scammers who will try to lure their targets into investing in a get-rich-quick scheme that eventually turns into a Ponzi scheme. on November 21, officials announced that two Estonian citizens were arrested in a $575 million cryptocurrency fraud and money laundering scheme. In addition, in September, U.S. authorities announced that the "head trader" of global cryptocurrency Ponzi scheme EmpiresX had pleaded guilty to conspiracy to commit securities fraud involving the theft of $100 million from investors. Major frauds such as EmpiresX have become frequent in the crypto market as fraudsters profit from the rich opportunities of digital asset scams.

Then we also have institutional risk - exchanges and platforms that cloak themselves in an image of mainstream and stability, but collapse due to holes in their balance sheets from customer deposits. the recent stunning collapse of FTX has sent shockwaves through the industry, which is already reeling from the effects of the "crypto winter," with cryptocurrency prices falling across the board. According to a U.S. Bankruptcy Court filing, FTX owes nearly $3.1 billion to its 50 largest creditors, although the true cost of FTX's demise is much higher in terms of the ripple effects that disrupt an industry.

The regulator's role in FTX's fraudulent operations on such a large scale will face more scrutiny in the future. To be fair, the U.K. Financial Conduct Authority (FCA) did issue a warning in September that it believed FTX might be offering financial services or products in the U.K. without authorization. But that notice was limited to the FCA's website. Apparently, it was not tweeted and not further disseminated. One must question the significance of making such a warning without doing more to ensure it reaches its target audience. the collapse of FTX was huge, but it certainly won't be the last of its kind.

Following the demise of the FTX, a deputy governor of the Bank of England called for the industry to be brought into the regulatory framework, warning that the continued growth of the crypto market meant that action should be taken now to avoid a bigger shock than the FTX implosion.




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