Welcome to Slate Sundays, CryptoSlate’s new weekly function showcasing in-depth interviews, knowledgeable evaluation, and thought-provoking op-eds that transcend the headlines to discover the concepts and voices shaping the way forward for crypto.
Crypto crime is on the rise. From the primary epic hack of mighty Mt. Gox to the intricate OneCoin rip-off orchestrated by nefarious Bulgarian fraudsters, underhanded dealings transfer in lockstep with digital property. Historical past has proven that wherever there’s worth, there’s additionally an ill-intended bystander lurking within the shadows simply ready to grab it. Because the business grows, so too does the issue, and it turns into more and more elaborate and laborious to disregard.
In response to blockchain forensics firm Chainalysis, 2025 is on observe to grow to be the worst 12 months of crypto-related theft to this point, with over $2.17 billion already stolen from crypto providers as of July. This quantity exceeds the full quantity stolen in 2024, a 12 months that was already set to interrupt data, with a 67% rise in pockets drainer assaults from 2023.
Figures like these reveal the gaping vulnerabilities throughout the crypto sector and influence mainstream adoption. As Kadan Stadelmann, CTO at AI developer platform Komodo, informed me in written commentary:
“We’re watching web3 bleed credibility in actual time. A 67% rise in pockets drainer assaults tells you the whole lot: crypto remains to be a playground for exploiters, not a basis for mainstream finance. Mass adoption stalls when the typical consumer needs to be half-coder, half-paranoid detective simply to maneuver funds.”
Invoice Zielke, Chief Income Officer at BitPay, the world’s largest crypto funds platform, additionally supplied his ideas:
“The rise in crypto scams doesn’t simply have an effect on current customers; it erodes belief and slows broader adoption. Potential newcomers, whether or not people or companies, might hesitate to have interaction with crypto after seeing tales about phishing assaults, faux wallets, or impersonation schemes. And whereas adoption is rising, notably as crypto positive factors traction as a substitute for conventional cost and remittance methods, issues about scams proceed to be a barrier.”
Don’t mess up, otherwise you lose all of it
The variety of so-called ‘pig butchering’ assaults, the place the perpetrator ‘fattens up’ the sufferer earlier than reaching in for the kill, is on the upward curve as nicely, with revenues growing by nearly 40% YoY from 2023 to 2024.
Whereas fortunately much less frequent, there has additionally been a rise in bodily assaults on Bitcoiners, referred to as wrench assaults. As Bitcoin safety knowledgeable and Casa co-founder and CSO Jameson Lopp shared in a latest Slate Sunday interview, there are over 200 documented bodily assaults on Bitcoiners, greater than 30 of these within the first half of 2025, main Chainalysis to conclude:
“It’s clear that 2025 is nicely on observe to have probably twice as many bodily assaults as the subsequent highest 12 months on report.”
Simply because the consultants grow to be conscious of 1 sort of assault and implement greatest practices to safeguard customers on-line, one other one pops up, like a recreation of whack-a-mole, as assaults grow to be more and more refined over time to prey on unsuspecting victims.
Many scams now leverage AI-generated content material, deepfakes, and superior phishing ways to bypass detection and pull the wool over the eyes of even the savviest of customers (and scare others away from self-custody altogether). Michal “Mehow” Pospieszalski, founder and CEO of MatterFi safety infrastructure supplier, warned in a remark:
“Scams don’t simply decelerate adoption, however extra importantly, destroy belief. If a consumer can lose the whole lot by clicking the flawed hyperlink or misreading a pockets string, no quantity of yield or innovation issues. Folks don’t onboard into environments the place the default assumption is: “Don’t mess up, otherwise you lose all of it.”
Crypto crime: the most typical varieties of assaults
Fraser Edwards is an knowledgeable in on-line fraud and the CEO of self-sovereign identification platform cheqd. I spoke with him to debate a few of these viewpoints on crypto crime and to achieve additional insights into the issue.
“In fraud, it’s a recreation of cat and mouse,” Edwards admits. “Proper now, we’re on this swing towards the fraudsters, and I believe it’ll get unhealthy, but it surely all the time swings from side to side.”
I’ve heard cybersecurity described on this manner earlier than, because the very goal of hackers is to disorient their victims with ever-more convincing and complex strategies to stay one step forward always. So, what are the most typical varieties of assaults to be looking out for, and how are you going to shield your self from them?
Phishing and social engineering
By far probably the most prolific of all varieties of crypto crime and cybersecurity threats are social engineering and phishing, which account for 70-90% of all assaults, and usually tackle the type of faux emails, texts, and web sites that trick customers into giving up their non-public keys or pockets credentials. Edwards offers an instance of 1 I’m positive has landed in my DMs earlier than:
“There’s a Calendly one by means of Twitter that’s extraordinarily nicely performed. They ship you the spoof Calendly hyperlink. You go to that hyperlink, you e book a slot, and also you then authenticate utilizing Twitter. They then get entry to your Twitter account and use that to ship out messages to defraud folks.”
A couple of greatest practices right here embrace all the time visiting the official channels of an organization, rigorously inspecting hyperlinks, double-checking pockets addresses, and by no means clicking on hyperlinks or attachments in emails.
AI-powered deepfake scams
Unsurprisingly, in an period of explosive AI progress, deepfake scams are on the rise as scammers incorporate AI-generated movies and voices to impersonate trusted figures or firm executives.
In 2023, a deepfake video of an interview with Tesla CEO Elon Musk was extensively circulated on platforms like YouTube. The video mimicked a CNBC interview, displaying a manipulated model of Musk claiming viewers may double their cash by sending Bitcoin or Ethereum to a supplied handle.
Deepfakes like this happen steadily, and whereas increasingly more customers are conscious of the menace, key personalities usually remind their followers to not fall for AI-generated clips of themselves, usually on Instagram and TikTok, endorsing faux funding platforms.
Verified information, an answer cheqd is pioneering to create verifiable AI, may also help remedy this drawback, as cryptographic signatures can show when content material was generated and the way. Edwards explains:
“An instance could be which you could create a video, or the content material credential was generated straight off once you report a video utilizing a telephone. Samsung is pondering of constructing this into one in all their flagship fashions, the place each time you are taking an image, it gained’t simply be the image. It can have a cryptographic signature straight off the gadget, so you may show that you just generated this image or this video and that it wasn’t AI-generated.”
Pig butchering
Simply as interesting because the identify, scammers ruthlessly construct private relationships utilizing social media or courting apps to achieve belief earlier than convincing victims to put money into fraudulent crypto tasks or accounts. As soon as massive sums are deposited, the proverbial thief within the evening vanishes together with the crypto (and the sufferer’s will to reside).
Pig butchering scams have been discovered to devastate their victims, inflicting a double blow that cripples them each financially and emotionally. In 2023, the FBI’s Web Crime Criticism Middle (IC3) reported a dramatic enhance in crypto-related fraud complaints, with losses totaling $3.96 billion, a rise of 53% over the earlier 12 months.
Edwards and his group supply one resolution to restrict the quantity of non-public information accessible within the stratosphere: reusable KYC, which allows customers to confirm their identification as soon as and securely reuse that verification with a number of providers, as a substitute of repeating the KYC course of for every one. This reduces the quantity of knowledge they share, prevents dangerous centralized “honeypots” of delicate information, and combats fraud since solely cryptographically signed, trusted credentials are used. He enthuses:
“I’d say that’s in all probability the most important factor that we’re seeing is the beginning of reusable KYC. I believe it’s going to speed up actually shortly.”
Ponzi and pyramid schemes
Ponzi schemes could also be nicely over 100 years previous, however hapless traders proceed to fall into the honey entice as fraudulent crypto platforms promise assured returns, pay early traders with cash from new individuals, and ultimately implode, leaving most traders out of pocket.
Just like the time hundreds of Nigerians misplaced thousands and thousands of {dollars} to CBEX, a fraudulent digital asset buying and selling platform posing as a reliable “China Beijing Fairness Trade,” or the latest scheme unraveled in June 2025 by First Liberty that led to an abrupt shutdown, leaving round 300 traders out of a minimum of $140 million.
Defending your self from a Ponzi scheme will be laborious, particularly when the time period is consistently misused by high-profile folks (Peter Schiff, anybody?). However rule of thumb is to be careful for unrealistic returns, stress ways, and any unsolicited affords. Additionally, perhaps watch the OneCoin documentary a few instances.
Rug pulls and pump-and-dump schemes
For those who’ve been in crypto for greater than a minute, you’ll be aware of unscrupulous rug pulls. Cruel builders or mission founders tirelessly shill their new token, appeal to thousands and thousands of {dollars} of funding, then abruptly take away all liquidity and exit stage left, leaving the viewers feeling as if the rug has actually been pulled from below their toes. Edwards sighs:
“It actually comes all the way down to folks not doing their due diligence and simply aping into these items. You’ve obtained numerous nameless groups.”
He says that verified information might assist traders to decide on tasks extra properly, as reliable founding group members can use decentralized IDs to construct up verified contributions to tasks and optimistic, provable reputations.
Bodily bitcoin assaults (wrench assaults)
Of the rising variety of bodily assaults on Bitcoiners documented by Lopp, there’s an rising pattern of extra incidents being carried out by organized crime. Wrench assaults have occurred on identified business figures reminiscent of Ledger co-founder, David Balland, and Lopp himself, which propelled him to erase himself from the web. However additionally they goal so-called crypto influencers who flaunt their wealth on platforms like TikTok and Instagram.
Among the best methods to guard your self from bodily assaults (past elaborate schemes to make your self disappear like a Bond villain) is to be discreet about your life-style. By no means inform anybody how a lot BTC you maintain, and please, don’t taunt your followers to have enjoyable staying poor when you’re dripping in diamonds and a Rolex. Edwards remarks:
“Clearly, as your wealth will increase, you could begin private safety about this, however I believe one of many larger issues is a few folks, whether or not deliberate or simply by means of ignorance, make it very seen what their wealth is, as a result of all of it’s on the ledger. Because of this, you may know somebody’s web value in a manner that you just wouldn’t in conventional banking methods.”
Issues can solely get… worse
Not like the D: Ream track from the 90s (do not forget that?), it’s unlikely that the scenario will enhance at any time. All of the indicators level to it getting worse. Chainalysis warns:
“Presently, 2025 is 17.27% worse than 2022 on the finish of June. If this pattern continues, we may see 2025 finish with greater than $4.3 billion stolen from providers alone.”
Yikes. And with the proliferation of AI brokers, cybercrime will tackle a lifetime of its personal, now not reliant on a human mastermind behind it. Edwards explains:
“All of this [cybercrime] is presently largely being performed by folks, so there’s somebody someplace who’s going and doing this. The place it’s going to get actually terrifying is the place this may get outsourced to AI brokers, and so they can do it at mass scale. That’s the place it’s going to get actually scary, since you’re now not restricted by human capability.”
Gulp. I’ve spoken of my reservations about AI earlier than, and I hate to be a Debbie Downer, however in all places I look, it feels just like the world is falling aside. From scrambles to manage the nuclear codes to AI brokers ready to assault us on-line, is there something inside our management in addition to working ourselves up right into a stupor?
In response to Chenxing Li, a developer at Conflux Community who supplied written commentary about discovering options to this drawback, your complete business wants “time to mature in three key methods.” He says:
“1. The Take a look at of Time: To see which tasks can ship really dependable and steady merchandise, thereby constructing a trusted model for safety.
2. Studying from Incidents: To collectively be taught from safety breaches and iterate on product designs to patch exploitable flaws.
3. Gaining Consumer Belief: For mature, safe options to step by step exchange outdated ones and earn widespread consumer adoption.”
However with AI growing on the velocity of a bullet, and cybercrime so rampantly up, do we have now time for the check of time? Are the options to fight on-line crime being rolled out quick sufficient? Edwards displays:
“Ideally, fast sufficient signifies that you’re getting the tech out earlier than the fraudsters even actually make hay with it. I believe we’re solely seeing that they’re making hay. It’s in all probability going to worsen. I believe then there’ll be a swing again the opposite manner, hopefully, however I don’t assume it’s fast sufficient.”
A glimmer of hope on the horizon
Luckily, all shouldn’t be misplaced. You could possibly take your head out of the sand for a short while and enterprise out on-line in any case. James Toledano, COO of self-custodial web3 pockets, Unity Pockets, identified that, whereas AI might exacerbate the issue, it will also be harnessed for good. He wrote:
“This isn’t a dropping battle. It’s a second to strengthen the inspiration. Self-custodial wallets stay inherently safe; most breaches consequence from deception, not technical failure. The answer begins with training: if unsure, don’t interact.
Simply as AI is being leveraged by unhealthy actors, it additionally holds monumental potential as a protection, enabling real-time rip-off detection, consumer habits monitoring, and adaptive menace response to revive confidence and drive protected web3 adoption.”
Edwards agrees, commenting:
“The tech is there to resolve this. The nice factor is it’s not like we have now this drawback and we don’t know what to do about it.”
One instance of a mission leveraging AI to fight fraud and scams is Algebra Labs, that’s constructing a brand new decentralized change (DEX) ruled fully by bots. Co-founder Vladimir Tikhimorov supplied some particulars, saying:
“We count on that AI will change many issues in regards to the business, together with menace detection and mitigation. When safety will be automated to react in real-time slightly than post-alert, usually when funds have been stolen, we consider the way forward for digital property will migrate in the direction of a lot of these platforms slightly than those that proceed to go it the best way they historically have.”
As crypto adoption accelerates and the expertise matures, the shadows of crime stay an unavoidable menace. But with a mixture of vigilance, consumer training, smarter safety practices, and evolving expertise like AI, there’s nonetheless a combating likelihood of avoiding a web-based apocalypse. The race between defenders and attackers could also be a relentless cat-and-mouse chase, however simply bear in mind who wound up with the cream.
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