Welcome to Slate Sundays, CryptoSlate’s new weekly function 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 laborious to disregard.
In keeping with blockchain forensics firm Chainalysis, 2025 is on monitor to change into the worst 12 months of crypto-related theft up to now, with over $2.17 billion already stolen from crypto providers as of July. This quantity exceeds the whole quantity stolen in 2024, a 12 months that was already set to interrupt information, with a 67% rise in pockets drainer assaults from 2023.
Figures like these reveal the gaping vulnerabilities inside the crypto sector and impression mainstream adoption. As Kadan Stadelmann, CTO at AI developer platform Komodo, instructed 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 continues to be a playground for exploiters, not a basis for mainstream finance. Mass adoption stalls when the typical person 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 interact with crypto after seeing tales about phishing assaults, pretend wallets, or impersonation schemes. And whereas adoption is rising, notably as crypto beneficial properties traction as a substitute for conventional cost and remittance programs, considerations 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 virtually 40% YoY from 2023 to 2024.
Whereas fortunately much less widespread, there has additionally been a rise in bodily assaults on Bitcoiners, often called 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 monitor to have doubtlessly twice as many bodily assaults as the following highest 12 months on document.”
Simply because the consultants change into 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 change into more and more refined over time to prey on unsuspecting victims.
Many scams now leverage AI-generated content material, deepfakes, and superior phishing techniques 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 person can lose the whole lot by clicking the fallacious 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 kinds of assaults
Fraser Edwards is an skilled in on-line fraud and the CEO of self-sovereign id 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 recreation of cat and mouse,” Edwards admits. “Proper now, we’re on this swing towards the fraudsters, and I believe it’ll get dangerous, nevertheless it all the time swings .”
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 kinds of assaults to be looking out for, and how are you going to shield your self from them?
Phishing and social engineering
By far essentially the most prolific of all kinds of crypto crime and cybersecurity threats are social engineering and phishing, which account for 70-90% of all assaults, and sometimes tackle the type of pretend 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 way of Twitter that’s extraordinarily nicely executed. They ship you the spoof Calendly hyperlink. You go to that hyperlink, you ebook 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 individuals.”
A number of greatest practices right here embody 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 development, 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 tackle.
Deepfakes like this happen regularly, and whereas increasingly 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 clear up this downside, as cryptographic signatures can show when content material was generated and the way. Edwards explains:
“An instance is likely to be which you could create a video, or the content material credential was generated straight off whenever you document a video utilizing a cellphone. Samsung is considering of constructing this into one among their flagship fashions, the place each time you’re taking an image, it gained’t simply be the image. It should have a cryptographic signature straight off the system, so you possibly can show that you just generated this image or this video and that it wasn’t AI-generated.”
Pig butchering
Simply as interesting because the title, 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 massive sums are deposited, the proverbial thief within the evening 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 enhance in crypto-related fraud complaints, with losses totaling $3.96 billion, a rise of 53% over the earlier 12 months.
Edwards and his crew supply one answer to restrict the quantity of non-public knowledge out there within the stratosphere: reusable KYC, which allows customers to confirm their id 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 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 rapidly.”
Ponzi and pyramid schemes
Ponzi schemes could also be nicely over 100 years outdated, however hapless traders proceed to fall into the honey lure as fraudulent crypto platforms promise assured returns, pay early traders with cash from new members, and finally implode, leaving most traders out of pocket.
Just like the time 1000’s of Nigerians misplaced tens of millions of {dollars} to CBEX, a fraudulent digital asset buying and selling platform posing as a professional “China Beijing Fairness Alternate,” or the latest scheme unraveled in June 2025 by First Liberty that led to an abrupt shutdown, leaving round 300 traders out of not less than $140 million.
Defending your self from a Ponzi scheme will be laborious, particularly when the time period is consistently misused by high-profile individuals (Peter Schiff, anybody?). However an excellent rule of thumb is to be careful for unrealistic returns, strain techniques, and any unsolicited presents. 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 acquainted with unscrupulous rug pulls. Cruel builders or mission founders tirelessly shill their new token, appeal to tens of millions 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 below their ft. Edwards sighs:
“It actually comes right down to individuals not doing their due diligence and simply aping into this stuff. You’ve obtained quite a lot of nameless groups.”
He says that verified knowledge might assist traders to decide on initiatives extra properly, as professional founding crew 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 development of extra incidents being carried out by organized crime. Wrench assaults have occurred on recognized business figures akin 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.
The most effective 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, it’s essential to begin taking a look at private safety about this, however I believe one of many greater issues is a few individuals, 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. Because of this, you possibly can know somebody’s web value in a method that you just wouldn’t in conventional banking programs.”
Issues can solely get… worse
Not like the D: Ream track from the 90s (keep in mind 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 development 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, not reliant on a human mastermind behind it. Edwards explains:
“All of this [cybercrime] is presently largely being executed by individuals, so there’s somebody someplace who’s going and doing this. The place it’s going to get actually terrifying is the place this will 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 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 moreover working ourselves up right into a stupor?
In keeping with Chenxing Li, a developer at Conflux Community who supplied written commentary about discovering options to this downside, the whole business wants “time to mature in three key methods.” He says:
“1. The Take a look at of Time: To see which initiatives can ship really dependable and secure 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 Person Belief: For mature, safe options to progressively change outdated ones and earn widespread person adoption.”
However with AI growing on the velocity of a bullet, and cybercrime so rampantly up, do we’ve got 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 method, hopefully, however I don’t suppose it’s fast sufficient.”
A glimmer of hope on the horizon
Luckily, all isn’t misplaced. You might be able to take your head out of the sand for a short time and enterprise out on-line in spite of everything. 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 schooling: if doubtful, don’t interact.
Simply as AI is being leveraged by dangerous actors, it additionally holds monumental potential as a protection, enabling real-time rip-off detection, person conduct monitoring, and adaptive menace response to revive confidence and drive protected web3 adoption.”
Edwards agrees, commenting:
“The tech is there to unravel 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 mission leveraging AI to fight fraud and scams is Algebra Labs, that’s constructing a brand new decentralized change (DEX) ruled utterly by bots. Co-founder Vladimir Tikhimorov supplied some particulars, saying:
“We anticipate that AI will change many issues concerning the business, together with menace detection and mitigation. When safety will be automated to react in real-time fairly than post-alert, usually when funds have been stolen, we imagine the way forward for digital property will migrate in direction of a lot of these platforms fairly 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, person schooling, smarter safety practices, and evolving know-how 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.