Hacks, scams, and crime relating to digital assets and cryptocurrencies
Erica Stanford · 2025
Abstract This chapter gives a brief overview of the history, causes, and main types of crypto crime and scams around today; the main perpetrators; why scams work; why know your customer checks do not always; and some thoughts about what can be done to prevent crypto crime. Topics covered include the transition from Bitcoin to stablecoins and privacy coins in criminal use of crypto, the rise of social engineering, psychological manipulation and grooming of victims, the role of deepfakes and AI in scamming victims, the scam-as-a-service industry, why the bar to entry to committing crypto crime has been lowered, and how AI and ID mules are used to bypass know your customer. It also covers the abilities and role of crypto analytics and tracing tools in investigating and combatting crypto crime and the ease of tracing crypto, especially Bitcoin, over fiat currencies or other assets, indicating why it is not wise to use Bitcoin to commit crime. As ‘An Analysis of Bitcoin’s Use in Illicit Finance’, a 2021 report compiled by former CIA director Michael Morell, states, crypto crime can be summarized in two key conclusions: ‘The broad generalisations about the use of Bitcoin in illicit finance are significantly overstated’, and