Mapping the crypto fraud landscape

[koshj]

Mind map of current frauds: https://i.imgur.com/JO7dey2.png

I am researching cryptocurrency related fraud, in the light of understanding the means and mechanisms bad actors use in order to scam others. I think it is important to be aware of what is going on in the ecosystem, so we can be more careful as individuals (i.e. personal safety), but also utilise the information for prevention.

Crypto-related fraud currently makes up a small portion of all transactions, yet as the space continues to grow, there will be new and enticing opportunities for those who wish to commit fraud or scams.

I have started gathering some myself (see image above), but I am especially interested in smaller, and lesser known types of fraud, scams, or malicious behaviour; as well as more concrete modes of operation (e.g. Specific methods of smart contract fraud). I also welcome any recent examples of the frauds I already mentioned.

I have a work-in-progress categorisation that I am working with. It is not concrete, and some of the members of each category are debatable, but it is a developing framework.

• Crypto-enabled: Traditional crimes whose impact and scale can be increased in the context of the cryptocurrency ecosystem.
• Crypto-dependent: Crimes which can only be committed in the context of the cryptocurrency ecosystem.
• Crypto-motivated: Crimes (traditional or otherwise) that are perpetrated in which the end goal is related to the cryptocurrency ecosystem.

I am interested in any insight or suggestions anyone has. If you list a type of fraud, it would be nice if you could include a source of any type (article, discussion, etc.).

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[odolvlobo]

It's a good list, but I disagree with many of the crypto-dependent items.

• An ICO scam is just a Ponzi scheme, pump-and-dump, or outright theft. The fact that a cryptocurrency is involved doesn't really change anything.
• Blockchain dusting is not fraud or a crime. It is a privacy issue.
• Exchange manipulation can happen on any kind of exchange.
• A 51% attack is not fraud or a crime.

Here are some more:

The irreversibility of cryptocurrencies enables the basic fraud of not getting what you pay for.
There is also a kind of trading fraud called man-in-the-middle which is enabled by the irreversibility and anonymity of a cryptocurrency.
Any kind of fraud that can be done with cash can be done better with cryptocurrencies.

[CryptopreneurBrainboss]

Just decided to qoute your image link so other members could see it.

It's a good list, but I disagree with many of the crypto-dependent items.

• An ICO scam is just a Ponzi scheme, pump-and-dump, or outright theft. The fact that a cryptocurrency is involved doesn't really change anything.

I disagree with you too, the only reason the term ICO was invested is because of cryptocurrency. Therefore ico scam is dependent on cryptocurrency just as the image above labels it. An ico scam can't happen without cryptocurrency not been involved therefore the fact that cryptocurrency is involve changes everything e.g like the way the scam is been executed.

[Bitcoin_Arena]

Crypto dependent, i think You missed out the biggest link of them all.
Manipulation by ICO and Coin ranking websites like Coinmarketcap, Coingecko, ICObench etc
Especially on ICObench's case, there have been so many ICOs that have been highly ranked by their so-called experts only to later turn out to scam.

I made a topic of the whole cycle in the trade discussion board https://bitcointalk.org/index.php?topic=5115256

[tyz]

Mind map of current frauds:
-snip-

Good and helpful post, even I agree with odolvlobo on some of his points.
You should still add explanations or descriptions to the individual types of frauds. I think most people hear these fraud types for the first time and can not imagine anything like that. This would make your post more informative.

[koshj]

It's a good list, but I disagree with many of the crypto-dependent items.

• An ICO scam is just a Ponzi scheme, pump-and-dump, or outright theft. The fact that a cryptocurrency is involved doesn't really change anything.
• Blockchain dusting is not fraud or a crime. It is a privacy issue.
• Exchange manipulation can happen on any kind of exchange.
• A 51% attack is not fraud or a crime.

Here are some more:

The irreversibility of cryptocurrencies enables the basic fraud of not getting what you pay for.
There is also a kind of trading fraud called man-in-the-middle which is enabled by the irreversibility and anonymity of a cryptocurrency.
Any kind of fraud that can be done with cash can be done better with cryptocurrencies.

Thank you for your response! I definitely see your points, and this is exactly the type of input I was looking for. You are correct about ICOs, and it is definitely debatable, but I felt that the way ICOs work in the crypto space was unique enough that it deserved its own mention.

Re the other points, you are technically correct, my definition of 'fraud' in this case was rather loose. In any case, valuable input!

Regarding the MITM attack, do you have any more info about that?

Just decided to qoute your image link so other members could see it.

Cheers!

Crypto dependent, i think You missed out the biggest link of them all.
Manipulation by ICO and Coin ranking websites like Coinmarketcap, Coingecko, ICObench etc
Especially on ICObench's case, there have been so many ICOs that have been highly ranked by their so-called experts only to later turn out to scam.

I made a topic of the whole cycle in the trade discussion board https://bitcointalk.org/index.php?topic=5115256

This is a good one! I suppose it is maybe hard to prove that the 'experts' were aware it was a scam though?

Good and helpful post, even I agree with odolvlobo on some of his points.
You should still add explanations or descriptions to the individual types of frauds. I think most people hear these fraud types for the first time and can not imagine anything like that. This would make your post more informative.

Thank you! Once I get a better outline, I will definitely add some explanations, as well as proof links or examples for each.

[r1s2g3]

In will like to put cryptojacking as "crypto motivated crime". In recent days crytojacking in in increase and the people who have nothing to do with crypto are victims of it.

[odolvlobo]

Regarding the MITM attack, do you have any more info about that?

MITM scam is well-known by LocalBitcoins traders. I have seen it discussed, but I don't know where it might be documented.

Here is how it works:

1. The scammer tells a buyer that they will sell them bitcoins, and tells a seller that they want to buy bitcoins.
2. The seller tells the scammer to send money to bank account XYZ, and the scammer relays that informaton to the buyer.
4. The buyer sends the money to XYZ and the seller sends the bitcoins to the scammer.
5. The scammer disappears with the bitcoins, leaving the buyer and seller to argue over who should keep the money.

[Kopyleft]

A lot of those possible frauds can be perpetrated in any financial market, and is not limited to cryptocurrency.
Pump and dump for example is not crypto-enabled.
One can create an artificial value for any asset and dump on those who bought in to the hype.

[Theb]

In will like to put cryptojacking as "crypto motivated crime". In recent days crytojacking in in increase and the people who have nothing to do with crypto are victims of it.

I agree with r1s2g3 on this one, cryptojacking wasn't included in your mind map. Although cryptojacking doesn't straight away ask cryptocurrency or even steal cryptocurrencies from you the criminal still gains money from the use of your hardware unknowingly. It's pretty prevalent that even the websites we visit now mines monero for them just by reading their articles, some employees even go as far as using their employer's computer hardware to mine crypto which is absolutely absurd. The victim here would not lose any money through theft but of course he will be incurring losses through the cost of mining crypto unknowingly and to top it off the victim won't even earn a dime for what he had done to the fraudster.

[koshj]

In will like to put cryptojacking as "crypto motivated crime". In recent days crytojacking in in increase and the people who have nothing to do with crypto are victims of it.

Indeed! A good suggestion that I initially forgot to add.

A lot of those possible frauds can be perpetrated in any financial market, and is not limited to cryptocurrency.
Pump and dump for example is not crypto-enabled.
One can create an artificial value for any asset and dump on those who bought in to the hype.

I think you are slightly missing the point, crypto-enabled does not mean it only occurs within cryptocurrencies, only that the scheme is now receiving unusual amounts of activity due to cryptocurrencies. (which is true) i.e. it is having a greater impact within the cryptocurrency context.

[whotookmycrypto]

Hey several others to consider:
- Fake exchanges (https://news.bitcoin.com/six-fake-crypto-exchange-sites-busted-by-ukraines-cyberpolice/)
- Social engineering (https://finance.yahoo.com/news/elon-musk-crypto-giveaway-scams-155646658.html)
- Cloud mining (see section 4 of https://fc15.ifca.ai/preproceedings/paper_75.pdf)
- Bullshit courses (https://crdaily.com/max-crypto-review/)

When are you going to release your report? Would like to have a look.

Thanks.