By CCN: Another week, another breathless report about cryptocurrency fraud. Is this even news anymore?
On April 30, CipherTrace reported that it had identified $1.2 billion in cryptocurrency fraud in the first quarter of 2019, compared to $1.7 billion fraud over the entirety of 2018.
If the pace continues, we’ll see almost $5 billion in cryptocurrency-related fraud this year.
That’s bad, guys. Really bad.
But before you wave the “crypto’s a scam” banner and John McAfee starts looking for ways to get out of eating his d*ck, let’s put things in perspective.
Crypto Fraud Looks Like a Big Deal—But It’s Really Not
First, $5 billion isn’t that much in the grand scheme of things.
It’s less than 3 percent of the entire cryptocurrency market. While that may seem like a lot, it’s smaller than the 4 percent grocers lose from shoplifting at grocery self-checkouts. And it pales in comparison to the money stolen from 5.66 percent of credit card users.
Second, cryptocurrency is almost totally unregulated. Does fraud affect only about 3% of an unregulated market? That’s all? If cryptocurrency is really so full of scams, shouldn’t it be higher?
Third, nobody knows whether the first quarter bump is a trend or not. Maybe fraud goes down the rest of the year?
Mainstream Press Got it Wrong (Again)
Here’s how the headlines should’ve read:
- Crypto Fraud High, Still Way Behind Credit Cards
- Outrage About $1.2 Billion Crypto Fraud Causes Grocers to Scream “What About Us?”
- Criminals Take Note: Cryptocurrency is Better Than Cash for Laundering Money. Use it!
When you look at the big picture, it’s silly to sensationalize cryptocurrency fraud but not other types of fraud.
Last year, scammers stole $3.4 billion from credit card companies through fake new accounts. That number doesn’t even include fraudulent charges.
Grocery theft is a little harder to pin down, but probably…