What are crypto-related crimes and how to avoid them

What are crypto-related crimes and how to avoid them

Investors and criminals are getting more interested in cryptocurrencies than ever before.

According to a report by Crypto Head, a crypto news media, reports of cryptocurrency crimes have increased by approximately 312% per year since 2016.

These crimes can include everything from hackers stealing investors’ coins to people falling for scams related to crypto investments.

What is the relation between crime and crypto?

Ransomware is the primary reason for the surging crime rate. It is a convenience, anonymity, and lack of supervision by a central regulatory agency. Due to this, it prefers crypto trading to traditional large-scale blackmail methods.

Analysts consider cryptos as the last and only instrument for ransomware purveyors, as wire transfer and banking regulations are lifted while trading with crypto.

Privacy-oriented coins, like Monero, are getting extremely popular among hacker groups.

Except for ransomware, the crime specter has been occupying decentralized finance for years. EU’s law enforcement agency in 2018 came across billions of USD’s washed through cryptos only in Europe.

The actual crime rate might be even more significant than statistics show. The novelty of cryptocurrency means that some objects might not fully understand the crime or how to report them, as Crypto Head’s study notes. In the United States, the SEC, CFTC, and the IRS are asset regulatory bodies. Their responsibility is to protect victims’ rights. However, their privilege operates only under several circumstances.

Crypto crime has a long-term impact on traders

The increased difficulty in tracking down criminal cryptocurrency transactions would drain funds from intelligence agencies, Michael Phelan, the head of the Australian Criminal Intelligence Commission, stated in April. Similarly, the United Kingdom banks might soon have to change the location of extra funds to cover possible losses on high-risk crypto assets.

There are several positive facts regarding crypto crime:

  • Criminals only make up a minority of total crypto users;
  • Private firms like CipherTrace are working to chase and neutralize crypto crime.
  • Law enforcement organizations are expanding more adept at counteracting digital crime.
  • Criminal groups moving into cryptocurrency from cash are easier to trace.

Despite the increase of ransomware, criminals make up a small minority of users. The illegal activity made up less than 1% of all transactions and dropped yearly, according to a 2018 report from the Foundation for Defense of Democracies.

A competing study by Oxford Law made in 2018 a much higher percentage of 44%. However, it is only around Bitcoin and does not include the whole cryptocurrency spectrum.

Many high-profile entities in the crypto industry have spoken out against its perceived links to crime.

Bitcoin is bad for the crime

CEO of index fund Bitwise Asset Management, Hunder Horsley, stated that Bitcoin is actually really bad for crime. He said that criminals are getting smarter, as crypto is a poor instrument for them.

Horsley indicated statistics from cybersecurity firm Chainalysis, demonstrating a sudden drop in crypto crimes between 2019 and 2020.

Likewise, CipherTrace, the tech analysis that offers services designed to counteract crypto crime, has noticed a sharp decrease in the theft of digital holdings. Though, a minor boom in fraud has replaced it.


Using crypto for criminal activities has been gradually geographically centralized

What are crypto-related crimes and how to avoid themCipherTrace ascertained more than 72,000 unique Iranian IP addresses allocated around Tehran. They were complicit in illegal transactions.

Law enforcement agencies such as the U.S. Justice Department are developing adept at analyzing, prosecuting, categorizing, and crypto crimes.

Late last year, the Department published an 80+ page report detailing a cryptocurrency enforcement framework. The report is concentrating on the capability to confiscate virtual assets and take down websites.


Surprisingly, crypto is also being used to seize criminals rather than support them.

Ignacio Santoyo, a human trafficker, was seized and arrested after Mexican law enforcement tracked his group’s bitcoin transactions In 2019.

The arrest took place in the wake of the law, requiring crypto trading platforms to report transfers valued at more than 56,000 pesos. It is the same as the requirements of traditional banks.

The new law made it possible for the Financial Intelligence Unit to track Santoyo down. Obviously, it wouldn’t be possible to follow the untrackable cash payments used by human trafficking groups.

What are the most often reported crypto crimes?

Often, reported crypto crimes that include scammers demanding payment in cryptocurrency or sending spontaneous offers to help you make money or increase your holdings, according to the FTC.

FTC agency states that one of the significant signs of a scam is when someone tells you to pay by cryptocurrency.

Thus, avoiding any unsolicited crypto-related offers might help, and it is always wise to research on your own first, read reviews and start trading yourself.

What you need to Consider Before Buying Bitcoin

We already reviewed that Bitcoin ownership might bring crime. However, besides the crime, there still are several factors you need to consider before getting the digital asset.

First, you need to realize that the money you invest in Bitcoin is unsafe from value fluctuations.

Besides, remember Bitcoin is a volatile investment. If you keen to find a more safe investment with guaranteed returns, Bitcoin or the cryptocurrency generally might not be a perfect choice. Bitcoin price fluctuated between $30,000 and $60,000 only over the past several months.

However, Bitcoin isn’t the only unstable cryptocurrency. Other, even smaller coins might be even more dangerous in terms of stability.

If you intend to own the cryptocurrencies anyway, try to consider experts’ suggestions. Experts recomend to keep any crypto investments to less than 5% of your portfolio. Also, try to make sure you have a robust conventional retirement investment strategy in the first place.

Experts also recommend you have extra emergency funds. Besides, you need to pay out all the high-interest debts before investing in cryptocurrencies.

The post What are crypto-related crimes and how to avoid them appeared first on FinanceBrokerage.

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