Welcome to Slate Sundays, CryptoSlate’s new weekly characteristic showcasing in-depth interviews, skilled 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 arduous to disregard.
In keeping with blockchain forensics firm Chainalysis, 2025 is on observe to turn out to be the worst 12 months of crypto-related theft to date, with over $2.17 billion already stolen from crypto companies as of July. This quantity exceeds the entire 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 impression 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 every part: crypto continues to be a playground for exploiters, not a basis for mainstream finance. Mass adoption stalls when the typical consumer must 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 offered his ideas:
“The rise in crypto scams doesn’t simply have an effect on present 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, pretend wallets, or impersonation schemes. And whereas adoption is rising, significantly as crypto features traction as an alternative choice to conventional fee and remittance programs, 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 rising 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 skilled and Casa co-founder and CSO Jameson Lopp shared in a current 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 doubtlessly twice as many bodily assaults as the subsequent highest 12 months on file.”
Simply because the consultants turn out to be conscious of 1 sort of assault and implement greatest practices to safeguard customers on-line, one other one pops up, like a sport of whack-a-mole, as assaults turn out to be more and more subtle 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 every part by clicking the unsuitable 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 forms of assaults
Fraser Edwards is an skilled 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 realize additional insights into the issue.
“In fraud, it’s a sport of cat and mouse,” Edwards admits. “Proper now, we’re on this swing towards the fraudsters, and I believe it’ll get unhealthy, however it at all times swings back and forth.”
I’ve heard cybersecurity described on this method 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 forms of assaults to be looking out for, and how will you defend your self from them?
Phishing and social engineering
By far essentially the most prolific of all forms 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 pretend emails, texts, and web sites that trick customers into giving up their non-public keys or pockets credentials. Edwards provides an instance of 1 I’m certain has landed in my DMs earlier than:
“There’s a Calendly one by way of Twitter that’s extraordinarily nicely finished. They ship you the spoof Calendly hyperlink. You go to that hyperlink, you guide 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.”
Just a few greatest practices right here embrace at all times 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 broadly circulated on platforms like YouTube. The video mimicked a CNBC interview, displaying a manipulated model of Musk claiming viewers might double their cash by sending Bitcoin or Ethereum to a offered handle.
Deepfakes like this happen incessantly, 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 pretend funding platforms.
Verified knowledge, an answer cheqd is pioneering to create verifiable AI, will help remedy this downside, as cryptographic signatures can show when content material was generated and the way. Edwards explains:
“An instance may be that you would be able to create a video, or the content material credential was generated straight off if you file a video utilizing a cellphone. Samsung is pondering of constructing this into one in all their flagship fashions, the place each time you’re taking an image, it gained’t simply be the image. It can have a cryptographic signature straight off the machine, so you’ll be able to show that you simply 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 realize belief earlier than convincing victims to put money into fraudulent crypto initiatives or accounts. As soon as giant sums are deposited, the proverbial thief within the night time vanishes together with the crypto (and the sufferer’s will to stay).
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 Grievance Middle (IC3) reported a dramatic improve 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 knowledge accessible within the stratosphere: reusable KYC, which permits customers to confirm their identification as soon as and securely reuse that verification with a number of companies, as a substitute of repeating the KYC course of for each. This reduces the quantity of knowledge they share, prevents dangerous centralized “honeypots” of delicate knowledge, and combats fraud since solely cryptographically signed, trusted credentials are used. He enthuses:
“I’d say that’s in all probability the largest 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 buyers proceed to fall into the honey entice as fraudulent crypto platforms promise assured returns, pay early buyers with cash from new individuals, and ultimately implode, leaving most buyers out of pocket.
Just like the time 1000’s 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 Alternate,” or the latest scheme unraveled in June 2025 by First Liberty that led to an abrupt shutdown, leaving round 300 buyers out of a minimum of $140 million.
Defending your self from a Ponzi scheme may be arduous, particularly when the time period is consistently misused by high-profile folks (Peter Schiff, anybody?). However an excellent rule of thumb is to be careful for unrealistic returns, strain ways, and any unsolicited provides. Additionally, possibly watch the OneCoin documentary a few instances.
Rug pulls and pump-and-dump schemes
In case you’ve been in crypto for greater than a minute, you’ll be accustomed to unscrupulous rug pulls. Cruel builders or venture founders tirelessly shill their new token, appeal to thousands and thousands of {dollars} of funding, then instantly take away all liquidity and exit stage left, leaving the viewers feeling as if the rug has actually been pulled from beneath their ft. Edwards sighs:
“It actually comes all the way down to folks not doing their due diligence and simply aping into this stuff. You’ve obtained a variety of nameless groups.”
He says that verified knowledge might assist buyers to decide on initiatives extra correctly, as reliable founding group members can use decentralized IDs to construct up verified contributions to initiatives 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 similar to 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 way of life. 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, that you must begin taking a look at private safety about this, however I believe one of many greater issues is a few folks, whether or not deliberate or simply by way of ignorance, make it very seen what their wealth is, as a result of all of it’s on the ledger. Consequently, you’ll be able to know somebody’s web value in a method that you simply wouldn’t in conventional banking programs.”
Issues can solely get… worse
Not like the D: Ream music 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:
“At the moment, 2025 is 17.27% worse than 2022 on the finish of June. If this pattern continues, we might see 2025 finish with greater than $4.3 billion stolen from companies 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 at the moment largely being finished 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 could 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 all over the place 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 keeping with Chenxing Li, a developer at Conflux Community who offered written commentary about discovering options to this downside, the whole business wants “time to mature in three key methods.” He says:
“1. The Check of Time: To see which initiatives can ship actually dependable and steady merchandise, thereby constructing a trusted model for safety.
2. Studying from Incidents: To collectively study from safety breaches and iterate on product designs to patch exploitable flaws.
3. Gaining Consumer Belief: For mature, safe options to regularly change outdated ones and earn widespread consumer adoption.”
However with AI creating on the pace of a bullet, and cybercrime so rampantly up, do we’ve got time for the take a look at 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 method, hopefully, however I don’t assume it’s fast sufficient.”
A glimmer of hope on the horizon
Happily, all shouldn’t be misplaced. You might be able to 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 shedding battle. It’s a second to strengthen the inspiration. Self-custodial wallets stay inherently safe; most breaches outcome from deception, not technical failure. The answer begins with training: if doubtful, don’t have interaction.
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 secure web3 adoption.”
Edwards agrees, commenting:
“The tech is there to resolve this. The great factor is it’s not like we’ve got this downside and we don’t know what to do about it.”
One instance of a venture leveraging AI to fight fraud and scams is Algebra Labs, that’s constructing a brand new decentralized alternate (DEX) ruled fully by bots. Co-founder Vladimir Tikhimorov offered some particulars, saying:
“We anticipate that AI will change many issues concerning the business, together with menace detection and mitigation. When safety may be automated to react in real-time reasonably than post-alert, usually when funds have been stolen, we imagine the way forward for digital property will migrate in direction of all these platforms reasonably than those that proceed to go it the best way they historically have.”
As crypto adoption accelerates and the know-how matures, the shadows of crime stay an unavoidable menace. But with a mixture of vigilance, consumer training, smarter safety practices, and evolving know-how like AI, there’s nonetheless a preventing likelihood of avoiding a web-based apocalypse. The race between defenders and attackers could also be a relentless cat-and-mouse chase, however simply keep in mind who wound up with the cream.
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