Crypto Crime Extends Beyond Headlines, Requires Global Response

Coin WorldThursday, Jun 19, 2025 10:19 am ET
2min read

Crypto crime extends far beyond the high-profile cases that dominate headlines, encompassing a broader spectrum of illicit activities that often go unnoticed. While incidents like the FTX collapse and various fraud schemes have garnered significant attention, the true extent of crypto crime involves more nuanced and pervasive issues. Jennie Levin, a prominent figure in the crypto community, has shed light on these deeper layers of crypto crime, highlighting the need for a more comprehensive understanding of the risks and challenges associated with digital currencies.

Ask Aime: Understanding the broader spectrum of crypto crime beyond high-profile incidents is crucial for investors navigating the digital currency landscape.

Levin points out that the underlying misconduct in crypto crimes is often not unique to the industry; it just features new, sometimes confusing names. For instance, front-running securities trades, a common practice in traditional finance, has its crypto equivalent. Many of today’s most damaging crypto crimes are highly technical exploits of blockchain protocols, often committed by people with deep knowledge of the code. These exploits involve manipulating the underlying system and the ordering of blocks to gain an advantage. This technical depth has created legal and ethical gray zones, especially in cases of so-called white hat hackers, who exploit vulnerabilities and then return the stolen funds. However, from a legal standpoint, such actions are still considered crimes and can result in charges.

Enforcement of these crimes is not always straightforward. In some jurisdictions, regulators misunderstand how decentralized systems work, leading to confusion and ineffectiveness in addressing these issues. The complexity and global nature of crypto crime require a more comprehensive and collaborative approach, involving international cooperation and the development of new technologies to detect and prevent illicit activities. The Justice Department's seizure of $225 million in cryptocurrency linked to "pig butchering" scams demonstrates the effectiveness of coordinated efforts between law enforcement agencies and regulatory bodies. These scams, which involve deceiving victims into investing in fraudulent schemes, have resulted in significant financial losses for individuals worldwide.

The Senate's passage of legislation to regulate stablecoins marks a significant step towards addressing some of the regulatory gaps in the crypto space. Stablecoins, which are designed to maintain a stable value, have become a popular form of digital currency due to their perceived stability. However, their lack of regulation has raised concerns about their potential use in illicit activities. The proposed legislation aims to provide a framework for regulating stablecoins, ensuring that they are subject to the same oversight as traditional financial instruments. The emergence of central bank digital currencies (CBDCs) and stablecoins as potential replacements for cash highlights the evolving landscape of digital finance. CBDCs, such as the proposed digital euro, are liabilities issued by central banks and are designed to provide a digital alternative to physical currency. Stablecoins, on the other hand, are privately issued digital currencies that are pegged to the value of another asset, such as the US dollar. Both CBDCs and stablecoins offer unique advantages and challenges, and their adoption will depend on a variety of factors, including regulatory frameworks and public acceptance.

In conclusion, the true extent of crypto crime goes beyond the headlines, encompassing a range of illicit activities that pose significant risks to individuals and the broader financial system. Enhanced regulatory measures, consumer education, and international cooperation are essential to address these challenges and ensure the safe and responsible use of digital currencies. As the crypto landscape continues to evolve, it is crucial for stakeholders to remain vigilant and proactive in addressing the risks and opportunities associated with this rapidly changing field.