Lesson 5 – Fraud with Blockchain

Today, cryptocurrencies are an incredibly valuable commodity for criminals. Cryptocurrency is liquid, easily transportable, and once a transaction is made, it is nearly impossible to reverse. As a result, a wave of scams, both decades-old classics (e.g., exit scams or pump and dump) and cryptocurrency-specific scams (e.g., 51 percent attack) have flooded the digital space.

Crypto thefts, hacks, and scams cause significant damage. Within a year, sums in the billions are registered through crypto crimes. Exchanges, platforms, and providers put a lot of energy and money into the security of their systems and take preventative measures against threats from inside and outside. For example, when a major $281 million hack of cryptocurrency exchange KuCoin took place in 2020, the exchange claimed that it subsequently recovered 84% of the stolen funds – something that was almost unthinkable in previous years.

This lesson shows different scams of criminals and explains their approach. However, the focus is on imparting knowledge in order to understand the mechanisms and not a guidebook.

Please also see the Mini Glossary and the references at the end of this lesson for further information.