Is crypto the solution or the problem?

Paying with crypto is traceable but favoured by fraudsters. Is it the solution or the problem?

Fraudsters never know how their action impacts their victim, until confronted by the person they’ve defrauded. Is crypto the solution? After all, unlike fiat currencies, all blockchain-based transactions can be traced for history. So, is crypto the solution to avoid being a victim?

The reason for the question is that someone posted on LinkedIn the other day that crypto is the best way to ensure protection from fraud because every movement of money can be tracked and traced back in history.

The thing is that I would disagree with that statement, in that a lot of false servers and movements are made on blockchains to the point where no-one can track or trace the original funds and where they ended up. More than this, most scammers today prefer a crypto payment as they can immediately move it worldwide, in real-time, from the victim to the fraudster receiver.

But, more than this, it came home to me again the other day that fraudsters do not care a jot about their victims. Most of them would throw their grandmother in her grave if it gave them a few thousand. That mentality is reinforced by talking to hackers, scammers and fraudsters, who tell me they never think about the impact of their action on the victim. They get a million dollars, who cares who lost it? It’s an interesting mentality.

So, what is the solution?

Well, it is not crypto. Crypto is a Wild West minefield of fraud and criminal activity on the Dark Web, according to many law enforcement authorities and, specifically, cryptocurrency is not a solution for tracking fraud. It does offer tools to trace illicit activity, due to its transparent blockchain technology, but cryptocurrencies are also a tool for fraudsters to commit scams and money laundering.

Criminals use Know Your Customer (KYC) bypasses, money mixing, and anonymous exchanges to hide their identities and cash out. The result is that blockchain analysis can reveal transaction paths, but recovering stolen crypto is difficult, especially when mixed with other funds or moved to jurisdictions with limited law enforcement cooperation.

This means that whether it is fiat currency, digital currency, cryptocurrency or any currency that is taken by criminal fraudsters, you most likely have no comeback.

What I find most interesting today is that whatever scamster is threatening you – whether you are Jaguar Land Rover or Noel Phillips

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– is that there are solutions emerging. One, which is interesting, is the response by the financial industry to offer 159. What is 159?

159 is a bank and government backed telephone number in the UK where, if you receive a suspicious call from your bank, you can call and ensure you are connected to the actual bank fraud department and not the fake one created by some APP (Authorised Push Payment) fraudster.

I guess the real reason this hit home is when fraudsters talk about how they operate. I’ve entertained a few on this blog, but was listening to a reformed criminal Alex Wood on daytime TV today it reinforced the views of others. The fraudsters mentality is that they do not think about the victim; they purely think about the money.

That all changed for Alex when he faced his victim in court, and discovered the impact of the fraud on the victim’s life. The victim lost a million, closed his business, sacked all his staff, lost his marriage and house and more. In other words, the aftermath of a fraud is massive, but the fraudster does not realise this until faced with his victim.

It made him realise that he hadn’t just stolen cash from a bank, but from a fellow human. There’s a lesson to be learned there.