HomeCryptoWhat are the most and least common crypto crime cases?

What are the most and least common crypto crime cases?

Cryptocurrency crime cases are nothing new at this point. Everyone has pretty much encountered a news article detailing another hacker breaking through a cryptocurrency exchange, or yet another Ponzi scheme defrauding thousands of people from their investments.

However, by seeing these crimes occur on almost a daily basis, we get a distorted view of what types are the most common. Is it the hack attack? Or maybe it’s the investment scam?

This article would like to showcase several crypto crime cases: what they look like, how they operate and how much they make on average based on whether or not they were caught.

The most common crypto crime cases

It is highly likely that if you pay attention to crypto news, you have already heard about these types of crimes occurring on almost a daily basis, therefore we will just list a few of them and discuss what exactly they look like, how they get away with these scams and how much on average they can make.

Hacking an exchange

We’ve heard of this one numerous times as well. Every single cryptocurrency exchange which has at least a little bit of notoriety within the crypto community has been a victim of a hack at one point in their existence. This may not have been a successful hack attempt from the criminals, but experiencing one is enough to get every user a bit more nervous, especially as soon as they see the scale just in 2019 alone.

There are several ways that hackers try to gain access to the exchange’s database or server. This could be done by transmitting a small or large sum of cryptocurrencies, and while it is being processed by the thousands of miners all over the world, try to access it through “transfer catching”.

Transfer catching is a subjective name as every enthusiast has their name for it. It’s the process where the hacker can access the public and private key of the server, access it and divert some of the capital to a different address, after which it’s inserted into a cold wallet.

Another form is to get through the security by brute force. This is where the computer makes millions of combinations and calculations to access the database by just guessing the password or simply avoiding all of the malware detectors and blockers.

This method is slowly becoming impossible as large as well as small exchanges are implementing technologies, that would essentially require the computing power of the whole world in conjunction with a small 100 year waiting time.

Hacks have bankrupted dozens of cryptocurrency exchanges all over the world and are still bankrupting them as we speak. The investors themselves may be able to walk away scot-free in this case, should the exchange have a customer-friendly compensation policy.

Should this be the case, the investors will get their lost funds back, but the exchange will still be at a loss.

The case of phishing

Phishing is a more common method of crypto crimes nowadays, which targets individuals rather than a large crypto exchange. It is done through an email, telephone call or a call through the internet from a criminal posing as a legitimate entity.

Should the victims answer these calls, open the email or pretty much interact with this crime in any way, they’d find themselves losing a lot of valuable information from their device.

In most cases, the phishing scam is designed to quickly intercept things such as passwords, IDs and the 2 Factor Authentication software, which is now becoming commonplace both on crypto exchanges as well as banks.

The least common method of phishing scams is when malware is downloaded on the victim’s device without them knowing anything about it. The malware then initiates itself to give the criminal remote access to the device, thus exposing the victim’s personal information.

Any other case of phishing is when the criminal forces the victim’s device to download crypto mining malware which drains the device’s performance for the profit of the criminal. It’s usually less damaging to the victims as it doesn’t really “steal” too much.

Investment & exit scams

These scams are usually the easiest to notice, but for some reason, they’re responsible for a fairly large chunk of the defrauded funds through cryptocurrencies.

They usually look like a hyped-up marketing promotion, where a man or a woman is trying to create tension by setting a deadline. The deadline is for you to invest with them. If you don’t then you’ll lose the opportunity to make millions and live on a yacht in the pacific like Bob, one of their customers, is living right now.

Naturally, there’s no Bob on a yacht in the Pacific, and there’s no deadline to invest in cryptocurrencies.

These people sometimes use celebrities to increase their credibility as well, one example was the use of Hugh Jackman in the promotion in one of the most obvious crypto scams seen so far.

The exit scam is a bit more elaborate though. The company spends a lot of resources to come across as trustworthy, they even pay a few dividends to their investors to keep them happy, only to disappear without any trace once they reach their goal amount. The most famous case of an exit scam is Bitconnect, which you may have heard of.

Least common crypto crime cases

Now let’s look at the least common crypto scams so that you’re still aware of the scope.

Regular coercion

This doesn’t really classify as a crypto scam. It’s more like a direct crime. Things like robberies and muggings are on this list. You may think that it’s impossible to gain cryptocurrencies from this, as the funds are on a digital ledger, meaning they can’t be taken right then and there.

However, there are examples of people attempting this. One such example was reported by Сasinopånett resource when a Norwegian crypto millionaire was approached in his own house, where the robber knew he was keeping his fortune in cryptocurrencies.

Luckily the man got away, but if you want more details about the case, you can check here and read the whole article detailing the struggle. 

There are also cases of gangs targeting each other because of cryptocurrencies, but on a much smaller scale.

Malware network

One of the few cases of a malware network was detected in South Africa, where the criminals would connect their malware to a specific server, be it public Wi-Fi in a cafe or just a lan server in an internet cafe.

The malware would immediately install itself on the victim’s device where it would remain active as long as the device was within the reach of the server.

You can already see why this was so ineffective, but essentially one of the easiest methods to hide oneself from the authorities.

Installing this malware in a location that filters through a lot of people all day every day, helped criminals stay under the radar for quite a long time before one of the victims started suspecting something due to their mobile device acting up even though it was brand new.

They’re very easy to avoid

As you can see most of the crypto scams that I’ve listed here are initiated by the victims themselves, only a few of these types are out of one’s hands, such as the malware network or the exchange hacks, but thankfully, they’re not as damaging to an individual’s wallet or well being.

All the other methods are easy to spot and avoid.

Giorgi Mikhelidze
Giorgi Mikhelidze
Giorgi is a Georgia software developer with two years of experience trading on the financial markets. He is now working to spread the knowledge about the Blockchain in his country and share all of his findings and research to as many crypto enthusiasts as possible.