Anyone Can be a Crypto Fraud Target - Part 1

By: Justin Hanson, Owner, Hanson Security Group

In our Financial Training Academy blog series, “Anyone Can Be a Crypto Fraud Target,” we explore how fraud on the blockchain can remove the personal aspect of causing financial harm to another person. Cryptocurrency offers a degree of anonymity to both suspects and victims, which can create a false sense of “doing no harm” among offenders, while also encouraging the targeting of select groups.

I’ve spent my life devoted to helping others through military service, local law enforcement, more than 25 years as a U.S. Secret Service Agent, supervising a Financial Crimes Task Force, and developing and teaching multiple graduate-level cryptocurrency investigative courses for a top Criminal Justice university. During that time, I’ve seen financial crime methods and platforms evolve significantly over the past 27 years.

The U.S. Secret Service was founded in 1865 to combat the widespread circulation of counterfeit U.S. currency. When I began my career with the Secret Service in May of 2000, we were trained extensively on identifying counterfeit currency. We learned to spot everything from obvious photocopied notes and inkjet printer fakes to more sophisticated bleached notes and those produced using professional printing presses.

Beyond counterfeit currency, we also investigated counterfeit checks, washed checks, and stolen checks. A significant amount of time and resources were dedicated to Treasury checks, as the Secret Service was still under the Department of the Treasury in the early 2000s.

It wasn’t until the latter part of my career that we began focusing on cryptocurrency fraud. This type of fraud was a game changer for criminals. It allowed them to steal large sums of money from unsuspecting victims with minimal risk of being caught. The elements of cryptocurrency fraud align closely with Routine Activity Theory.

The crypto world opened a new frontier; one that law enforcement was not fully prepared for, but criminals were. Individuals tried their luck with this new form of currency; some became wealthy, while others lost significant amounts of money. It took time before established investment firms and protective mechanisms became available to help individuals navigate this space more safely.

With the semi-anonymity of the blockchain, criminals are no longer limiting their targets to traditional white-collar victims, real estate agencies, or businesses through counterfeit checks or Business Email Compromise (BEC) schemes. Instead, they are targeting anyone who makes a mistake or falls victim to their traps.

That includes doctors, lawyers, law enforcement officers, and politicians; people criminals would have stayed FAR away from just 15 years ago.

In our next episode, we’ll discuss specific incidents showing how even the smartest and most diligent individuals have fallen victim to cryptocurrency fraud.

Until next time, stay safe out there.

Financial Training Academy is a monthly blog series written by members of Hanson Security Group.

References

Cohen, L. E., & Felson, M. (1979). Social Change and Crime Rate Trends: A Routine Activity Approach. American Sociological Review, 44(4), 588–608.