London, UK, 5th Jan 2022, ZEXPRWIRE, Cryptocurrencies are becoming more popular every day. Their attention is due to their decentralized nature which, in turn, derives from the blockchain technology that supports them. Blockchain is actually a sort of an accounting book shared by all network users where every transaction is registered and visible for everyone without the possibility of editing or erasing it later. All information recorded in this book cannot be faked or modified, which makes it a safe and reliable system. TrueNorthBit Broker David Sorkin told us that this technology is used for currencies but the idea of its applications is much broader – you can use it everywhere where there is a need to store information safely and transparently.
In fact, blockchain’s security level depends on the cardinality of users – the more people are involved in accessing blockchain, the more secure it is (if we add more computers to the system, this increases its strength).
Despite the fact that all transactions on the blockchain are transparent for its users and hidden from third parties, they can be still untraceable. That’s because for transferring information between network participants special encryption is employed and there is no possibility of decrypting information without proper keys. They are usually stored in special wallets, otherwise, it is impossible to gain access to them.
Crypto crimes are not an uncommon thing in today’s world. As new opportunities are opened with the arrival of new technologies, there appear new ways to commit crimes. Mr Sorkin says that people find new ways to scam others, steal their money and personal information. The blockchain is not an exception at all. Users are tricked into paying for fake digital currencies, the crypto exchanges are robbed of hundreds of bitcoins at times or enter addresses of phishing websites when sending their data.
Every day there appear more and more cases of fraud that affect cryptocurrencies. The people behind these crimes are very often anonymous which makes it nearly impossible to find them and prove their guilt in court. The countries need to take over the responsibility for the crimes committed on their territory.
Need for legislation
Crypto transactions are gaining more and more popularity around the world which means that it is necessary to have appropriate legislation governing the field. Otherwise, criminals will take advantage of this situation. Unfortunately, not all states are ready for interacting with cryptocurrencies yet or they do it very cautiously without clarifying all doubts about using such digital assets.
According to Mr Sorkin, the lack of laws and rules governing the use of cryptocurrencies is one of the reasons why criminals become more active in this field – they can more easily evade criminal liability for their actions if no legal norms are introduced to regulate the sphere. This problem has been already raised by many countries and international organizations that call upon introducing legislation regulating cryptocurrencies.
In the year 2021, crypto scams have been up by 81%. According to a report by chainalysis, more than 7.7 billion USD were lost by investors in 2021. Out of all the scams, Rug Pulls accounted for 2.8 billion USD. Mr Sorkin told us that Rug Pulls are basically a scam that tricks investors into sending large sums of money to the criminals who promise them huge profits. Scams like these are becoming more and more popular with time.
Some of the transactions that get reported daily by traditional media turn out to be scams or some other illegal activity. Law enforcement agencies get involved in verifying such reports and trade organizations try to find a solution to prevent such incidents from taking place. However, it is nearly impossible to find those behind the crimes as they use various crypto wallets and exchanges which make them untraceable.
The main thing that needs to be done now is to develop a uniform regulatory framework for cryptocurrencies around the world. Otherwise, criminals will continue influencing their prices and create problems for innocent users. Apart from rug pulls there are other types of scams such as:
Ponzi schemes, Chain Letters, Free Lunch and Pyramid Schemes
Ponzi schemes, Chain Letters and Free Lunches are practised by fraudsters on social networks and messengers while pyramid schemes were the most popular ones in 2016. The criminals offer their victims to send a small amount of money which will be multiplied ten-fold within a month if they add new members to their team. To benefit from this amazing offer, people are normally asked to pay a membership fee or send the criminals some money for getting involved in …
According to Mr Sorkin, criminal activity around cryptocurrencies gets more and more attention every year. That is why it becomes even more important to have appropriate legislation that will protect investors from being scammed. If criminals manage to find ways to benefit from the crypto sphere, the prices will drastically fall which means that regular people who work hard for their money will lose all or most of their assets.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.