Cryptocurrencies are rife with scams and money laundering

This is not a headline I am happy to share but, after being scammed, it is time to share it. After all, you would think that, working in finance, I would be savvy to all criminal scams. I’m not.

Sure, the SMS that says a parcel couldn’t be delivered or the email saying that I’m the heir of Gordon Skinner who has left me £5 million are obvious, but some are more mysterious.

My experience is that I have a physical bitcoin. I bought it as a joke a decade ago and decided to cash it in. Believing that this would be easy, because I had the bitcoin address, I started the process only to discover that I didn’t have the private keys. The private keys are essential to unlock a bitcoin address and the clever scammer who sold me the bitcoin ten years ago didn’t send them. So, I started googling whether one could retrieve lost keys and found a company who promised they could.

They couldn’t.

What they do is promise they can find the lost private keys and then tell you that you have to pay for getting through barriers and gateways to get the keys. Of course, if you pay, they’re just taking the money. There are no ways to get the lost private keys, no matter how much you pay. It taught me a lesson and yes, I got scammed. The only saving grace is that I’m savvy enough to realise that, after the first payment, these guys were just scammers.

Scamming in the cryptocurrency space is rife today. Crypto criminals stole over $3.4 billion in 2025, with a significant portion from large-scale hacks, but individual investor attacks also grew, reaching about $713 million in value stolen from individuals,

And there are so many scams out there from fake trading platforms to AI-generated ads using deep fake celebrities to pig butchering, where you fleece someone over time through trust relationships like romance scams and more.

Then there’s money laundering.

According to Chainalysis, the blockchain analytics company, cryptocurrency money laundering reached $82 billion in 2025*, a more-than-eightfold increase since 2020. Most of it comes from China apparently. Chainalysis reckons that Chinese-language money laundering networks (CMLNs) now dominate crypto money laundering activity, processing an estimated 20% of illicit crypto funds over the past five years.

That’s a little surprising when Iranian operators are moving more money than ever over crypto. According to a report by Elliptic, a crypto analytics company, at least $507 million of cryptocurrency issued by Tether – a company touted by the Reform UK leader, Nigel Farage – passed through accounts that appear to be controlled by Iran’s central bank in order to avoid the global sanctions on the regime.

That doesn’t surprise me as I presented to an Iranian conference over ten years ago and advised them that their best bet was to invest in crypto to avoid sanctions. Whoops! Should I have just blogged that?

All of this of course gives cryptocurrency a bad name. It is not bad in its heart – the cryptocurrency space, remember, is designed to allow people to share money in real-time with no intermediary involved. That was Satoshi Nakamoto’s vision:

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

The issue is that, without an intermediary to provide some oversight, the whole market is rife with opportunities for criminal activities. Just my view but, as I have always said, you cannot have money without governance. The question is: who is that government?

Meanwhile, going back to my headline here: Cryptocurrencies are rife with scams and money laundering. It just reflects the same things we see in traditional financial services.

 

* Interestingly, just as I writing this, I got a report from another company, TRM Labs, who think that illicit activity using crypto is twice the amount of Chainalysis’s estimate. Their report states that illicit cryptocurrency activity surged to a record $158 billion in 2025, marking a 145% increase year-over-year.

TRM Labs, a platform that follows cryptocrimes, attributes part of this spike to new methodological improvements that better capture the scale and context of illicit flows. The updated analysis shows illicit activity accounted for 1.2% of all on‑chain volume, while illicit actors captured 2.7% of available crypto liquidity.

Key findings include:

• Sanctions‑related activity grew over 400%, driven mainly by Russia-linked networks.
• A Ruble‑pegged stablecoin (A7A5) processed over $72 billion dominating illicit activity.
• Stablecoins accounted for ~95% of illicit flows to sanctioned entities.
• Chinese-language escrow and laundering networks handled over $100 billion, functioning as global illicit settlement infrastructure.

They emphasise that crypto crime is rising because crypto is now embedded deeply in global finance, and that AI-enabled fraud and the speed of financial crime are reshaping the landscape.

You can download their report here: https://www.trmlabs.com/reports-and-whitepapers/2026-crypto-crime-report