The Securities and Exchange Commission (SEC) is reducing its cryptocurrency enforcement unit, raising concerns at a time when cybercrime linked to digital assets appears to be escalating.
Last month, a hacker stole approximately $1.5 billion from the cryptocurrency exchange Bybit, marking the largest theft the industry has ever witnessed. This incident underscores a troubling trend—crypto-related crime seems to be worsening rather than improving.
Reports indicate that illicit cryptocurrency transactions reached unprecedented levels in 2024, with estimates ranging from $40 billion to $75 billion flowing into suspicious digital addresses.
Crypto at the Heart of Cybercrime
Cryptocurrency is increasingly being exploited to facilitate crimes that affect millions of Americans. Ransomware attacks—where hackers lock users out of their systems until a ransom is paid—have reached record levels, with digital currencies serving as the preferred method of payment due to their anonymity and ease of international transfer.
One of the most high-profile attacks in 2024 targeted UnitedHealth Group, impacting hospitals, doctors’ offices, and pharmacies across the U.S. The company was forced to pay a ransom of approximately $22 million in Bitcoin to regain access to its systems.
The Rise of Meme Coin Frauds
Beyond ransomware, cryptocurrency has become a breeding ground for fraudulent schemes such as meme coin “rug pulls.” These involve investors buying into a digital token associated with a trending meme or celebrity, only to see insiders dump their holdings once prices soar, leaving others with worthless assets.
A notable example is Haliey Welch, known as the “Hawk Tuah Girl,” who leveraged her viral internet fame to launch a meme coin. Initial enthusiasm saw prices surge, but the token’s value plummeted by over 90% when a small group of insiders offloaded more than 80% of its supply. One distraught investor shared online, “I am a huge fan of Hawk Tuah, but you took my life savings.”
Romance Scams and Bitcoin ATMs
Individual investors are also falling victim to sophisticated cryptocurrency frauds, including “pig butchering” scams, where cybercriminals establish fake romantic relationships online before manipulating their victims into investing in fraudulent crypto schemes.
Shai Plonski, a California resident, believed he had found his ideal partner through Facebook. After weeks of discussions about shared interests in yoga and poetry, Plonski confided in “Sandy” about his business struggles. She persuaded him to invest in crypto, only for him to later discover that he had lost his life savings and had no way to withdraw his funds. He was just one of over 40,000 reported victims of such scams in the U.S.
Another growing concern is Bitcoin ATM fraud. Scammers convince victims to deposit cash into cryptocurrency ATMs using QR codes, instantly transferring the funds to fraudulent digital wallets. Elderly Americans have been disproportionately targeted by such schemes. In Beaufort County, South Carolina—home to a large senior population—crypto scams accounted for $3.1 million in reported losses last year, with several cases involving Bitcoin ATMs. One retired healthcare worker lost $7,500 after receiving a fraudulent call claiming she had missed jury duty and needed to pay bail via Bitcoin.
Calls for Stronger Regulation
The increasing prevalence of cryptocurrency-related crimes has led to mounting criticism over regulatory rollbacks. The SEC’s decision to scale back enforcement efforts has sparked concerns that digital assets will become an even greater haven for fraudsters and cybercriminals.
While SEC officials have stated their commitment to ensuring that cryptocurrency does not serve as a refuge for illicit activities, many experts warn that the industry already harbors widespread fraud. Without stronger regulatory oversight, they argue, ordinary investors and institutions will continue to bear the brunt of cryptocurrency-related crime.
