The cryptocurrency industry is facing significant challenges due to the rise of fraud, which reached $9.9 billion in 2024. The article outlines key issues and strategies aimed at combating fraud.
Challenges Facing the Crypto Sector
The cryptocurrency sector is facing a growing wave of fraud. In 2024, the volume of cryptocurrency scams reached approximately $9.9 billion, with forecasts for 2025 suggesting further growth.
Fraudulent schemes range from traditional forms, such as Ponzi schemes and pump-and-dump tactics, to newer methods specific to the cryptocurrency environment, such as address poisoning.
The harm from these actions strikes at the reputation of the entire sector and diminishes consumer trust.
From Theory to Practice: Strategies Against Fraud
Industry stakeholders must focus on three main strategies:
* Recognizing that even dedicated crypto fraudsters rely on fiat currency on- and off-ramps, which are critical points to intervene against crypto-linked fraud. * Building AML defenses against laundering of fraud profits through digital assets, requiring seamless data exchange across the value chain. * Leveraging the expertise of experienced fraud prevention professionals to help mature compliance in the digital assets sector and effectively counter emerging fraud typologies.
Accelerating Data Collaboration
The UK presents a favorable legal and regulatory environment for championing cross-sector data sharing. Recently, the Information Commissioner’s Office clarified that data protection must not be used as a barrier when preventing fraud.
Legislative reforms like the Data (Use and Access) Act 2025 emphasize crime prevention as a recognized legitimate interest, strengthening the legal case for data sharing.
Regulatory plans suggest that digital assets will fall under similar consumer protection laws as traditional finance, inherently requiring cross-industry data sharing to prevent fraud.
The cryptocurrency sector understands the urgent reputational and regulatory risks posed by fraud. However, combating this challenge requires unified cross-industry data sharing efforts for effective global fraud prevention.
