Crypto Crime Losses Surge 100% in 2025, Driven by Slow Regulations and FOMO

Crypto crime losses have reached unprecedented levels in the first half of 2025, surpassing the total losses from all of 2024. This surge in criminal activity is attributed to a combination of factors, including slow regulations, the fear of missing out (FOMO), and the growing adoption of cryptocurrencies. Cybersecurity practitioners have noted that the rapid proliferation of new crypto assets, particularly memecoins, combined with a surge in retail investors and limited regulatory oversight, has created ample opportunities for criminal activities such as theft, bogus investment schemes, scams, and frauds.

Bill Callahan, a retired DEA agent and cryptocurrency investigator, highlighted that the anonymity offered by cryptocurrencies and the ease of setting up scams make them appealing to bad actors. He emphasized that criminals have the time, money, and resources to perfect their activities, and they do not need to succeed every time to make significant profits. The risk versus reward ratio favors crypto criminals, making it an attractive avenue for illicit activities.

Blockchain security firm CertiK reported that the average loss per security incident in 2025 has been $4.3 million, with the median loss being $103,996. Natalie Newson, a senior blockchain investigator at CertiK, pointed out that influencers and key opinion leaders continue to launch tokens with questionable intent, profiting through tactics like sniping and leaving retail investors exposed. This convergence of conditions has emboldened bad actors, making the crypto space increasingly hostile for legitimate users and builders.

Market surveillance firm Solidus Labs revealed that 98.7% of tokens on the token launchpad Pump.fun exhibit characteristics of pump-and-dump schemes. Law enforcement agencies worldwide face growing challenges, including limited resources, cross-jurisdictional complexities, and the technical sophistication of cybercriminals. A report from blockchain analysis firm Chainalysis highlighted money laundering techniques as a particular challenge for law enforcement agencies and crypto service providers, further widening the gap between illicit activity and accountability.

Newson speculated that increased smart contract security and user education could help mitigate the risks, but admitted that it is impossible to stop criminals entirely. Hank Huang, CEO of Kronos Research, argued that regulators have swung from overreach to underreaction, creating an imbalance that fosters a crypto crime supercycle. He suggested that the solution is not more crackdowns but smart, targeted regulation to find a balance that continues to drive mass adoption.

Despite recent enforcement actions targeting darknet marketplaces worldwide, Huang noted that losses from crypto crime will never hit zero because decentralized markets with anonymous participants will always attract both good and bad actors. Instead of trying to eliminate crypto losses, the focus should be on minimizing risks for users. Huang emphasized that other industries are also facing similar challenges, but the speed and global access of crypto make it especially vulnerable. These attacks are less about targeting crypto and more about testing the limits of emerging systems.