Welcome to Slate Sundays, CryptoSlate’s new weekly function showcasing in-depth interviews, skilled evaluation, and thought-provoking op-eds that transcend the headlines to discover the concepts and voices shaping the way forward for crypto.Crypto crime is on the rise. From the primary epic hack of mighty Mt. Gox to the intricate OneCoin rip-off orchestrated by nefarious Bulgarian fraudsters, underhanded dealings transfer in lockstep with digital property. Historical past has proven that wherever there may be worth, there may be additionally an ill-intended bystander lurking within the shadows simply ready to grab it. Because the business grows, so too does the issue, and it turns into more and more elaborate and arduous to disregard.In line with blockchain forensics firm Chainalysis, 2025 is on observe to turn into the worst yr of crypto-related theft to date, with over $2.17 billion already stolen from crypto companies as of July. This quantity exceeds the full quantity stolen in 2024, a yr that was already set to interrupt data, with a 67% rise in pockets drainer assaults from 2023.Figures like these reveal the gaping vulnerabilities throughout the crypto sector and influence mainstream adoption. As Kadan Stadelmann, CTO at AI developer platform Komodo, instructed me in written commentary:“We’re watching web3 bleed credibility in actual time. A 67% rise in pockets drainer assaults tells you all the pieces: crypto remains to be a playground for exploiters, not a basis for mainstream finance. Mass adoption stalls when the typical consumer must be half-coder, half-paranoid detective simply to maneuver funds.”Invoice Zielke, Chief Income Officer at BitPay, the world’s largest crypto funds platform, additionally offered his ideas:“The rise in crypto scams doesn’t simply have an effect on current customers; it erodes belief and slows broader adoption. Potential newcomers, whether or not people or companies, could hesitate to interact with crypto after seeing tales about phishing assaults, pretend wallets, or impersonation schemes. And whereas adoption is rising, notably as crypto positive factors traction as an alternative choice to conventional fee and remittance programs, issues about scams proceed to be a barrier.”Don’t mess up, otherwise you lose it allThe variety of so-called ‘pig butchering’ assaults, the place the perpetrator ‘fattens up’ the sufferer earlier than reaching in for the kill, is on the upward curve as properly, with revenues growing by nearly 40% YoY from 2023 to 2024.Whereas fortunately much less frequent, there has additionally been a rise in bodily assaults on Bitcoiners, referred to as wrench assaults. As Bitcoin safety skilled and Casa co-founder and CSO Jameson Lopp shared in a current Slate Sunday interview, there are over 200 documented bodily assaults on Bitcoiners, greater than 30 of these within the first half of 2025, main Chainalysis to conclude:“It’s clear that 2025 is properly on observe to have doubtlessly twice as many bodily assaults as the following highest yr on document.”Simply because the specialists turn into conscious of 1 kind of assault and implement finest practices to safeguard customers on-line, one other one pops up, like a recreation of whack-a-mole, as assaults turn into more and more refined over time to prey on unsuspecting victims.Many scams now leverage AI-generated content material, deepfakes, and superior phishing techniques to bypass detection and pull the wool over the eyes of even the savviest of customers (and scare others away from self-custody altogether). Michal “Mehow” Pospieszalski, founder and CEO of MatterFi safety infrastructure supplier, warned in a remark:“Scams don’t simply decelerate adoption, however extra importantly, destroy belief. If a consumer can lose all the pieces by clicking the flawed hyperlink or misreading a pockets string, no quantity of yield or innovation issues. Individuals don’t onboard into environments the place the default assumption is: “Don’t mess up, otherwise you lose all of it.”Crypto crime: the commonest forms of attacksFraser Edwards is an skilled in on-line fraud and the CEO of self-sovereign id platform cheqd. I spoke with him to debate a few of these viewpoints on crypto crime and to realize additional insights into the issue.“In fraud, it’s a recreation of cat and mouse,” Edwards admits. “Proper now, we’re on this swing towards the fraudsters, and I believe it’ll get unhealthy, but it surely at all times swings .”I’ve heard cybersecurity described on this approach earlier than, because the very goal of hackers is to disorient their victims with ever-more convincing and complex methods to stay one step forward always. So, what are the commonest forms of assaults to be looking out for, and how are you going to shield your self from them?Phishing and social engineeringBy far probably the most prolific of all forms of crypto crime and cybersecurity threats are social engineering and phishing, which account for 70-90% of all assaults, and usually tackle the type of pretend emails, texts, and web sites that trick customers into giving up their personal keys or pockets credentials. Edwards offers an instance of 1 I’m positive has landed in my DMs earlier than:“There’s a Calendly one by way of Twitter that’s extraordinarily properly achieved. They ship you the spoof Calendly hyperlink. You go to that hyperlink, you e book a slot, and also you then authenticate utilizing Twitter. They then get entry to your Twitter account and use that to ship out messages to defraud individuals.”A couple of finest practices right here embody at all times visiting the official channels of an organization, rigorously inspecting hyperlinks, double-checking pockets addresses, and by no means clicking on hyperlinks or attachments in emails.AI-powered deepfake scamsUnsurprisingly, in an period of explosive AI development, deepfake scams are on the rise as scammers incorporate AI-generated movies and voices to impersonate trusted figures or firm executives.In 2023, a deepfake video of an interview with Tesla CEO Elon Musk was broadly circulated on platforms like YouTube. The video mimicked a CNBC interview, exhibiting a manipulated model of Musk claiming viewers may double their cash by sending Bitcoin or Ethereum to a offered deal with.Deepfakes like this happen steadily, and whereas increasingly customers are conscious of the risk, key personalities typically remind their followers to not fall for AI-generated clips of themselves, typically on Instagram and TikTok, endorsing pretend funding platforms.Verified information, an answer cheqd is pioneering to create verifiable AI, may also help remedy this downside, as cryptographic signatures can show when content material was generated and the way. Edwards explains:“An instance is perhaps which you could create a video, or the content material credential was generated straight off once you document a video utilizing a cellphone. Samsung is pondering of constructing this into one among their flagship fashions, the place each time you are taking an image, it received’t simply be the image. It is going to have a cryptographic signature straight off the system, so you may show that you just generated this image or this video and that it wasn’t AI-generated.”Pig butcheringJust as interesting because the identify, scammers ruthlessly construct private relationships utilizing social media or courting apps to realize belief earlier than convincing victims to put money into fraudulent crypto tasks or accounts. As soon as giant sums are deposited, the proverbial thief within the evening vanishes together with the crypto (and the sufferer’s will to stay).Pig butchering scams have been discovered to devastate their victims, inflicting a double blow that cripples them each financially and emotionally. In 2023, the FBI’s Web Crime Criticism Heart (IC3) reported a dramatic improve in crypto-related fraud complaints, with losses totaling $3.96 billion, a rise of 53% over the earlier yr. Edwards and his group provide one answer to restrict the quantity of private information accessible within the stratosphere: reusable KYC, which allows customers to confirm their id as soon as and securely reuse that verification with a number of companies, as an alternative of repeating the KYC course of for each. This reduces the quantity of data they share, prevents dangerous centralized “honeypots” of delicate information, and combats fraud since solely cryptographically signed, trusted credentials are used. He enthuses:“I’d say that’s most likely the largest factor that we’re seeing is the beginning of reusable KYC. I believe it’s going to speed up actually shortly.”Ponzi and pyramid schemesPonzi schemes could also be properly over 100 years outdated, however hapless buyers proceed to fall into the honey entice as fraudulent crypto platforms promise assured returns, pay early buyers with cash from new members, and ultimately implode, leaving most buyers out of pocket.Just like the time 1000’s of Nigerians misplaced thousands and thousands of {dollars} to CBEX, a fraudulent digital asset buying and selling platform posing as a legit “China Beijing Fairness Change,” or the latest scheme unraveled in June 2025 by First Liberty that led to an abrupt shutdown, leaving round 300 buyers out of no less than $140 million.Defending your self from a Ponzi scheme could be arduous, particularly when the time period is continually misused by high-profile individuals (Peter Schiff, anybody?). However rule of thumb is to be careful for unrealistic returns, stress techniques, and any unsolicited gives. Additionally, possibly watch the OneCoin documentary a few instances.Rug pulls and pump-and-dump schemesIf you’ve been in crypto for greater than a minute, you’ll be conversant in unscrupulous rug pulls. Cruel builders or undertaking founders tirelessly shill their new token, appeal to thousands and thousands of {dollars} of funding, then all of a sudden take away all liquidity and exit stage left, leaving the viewers feeling as if the rug has actually been pulled from beneath their toes. Edwards sighs:“It actually comes all the way down to individuals not doing their due diligence and simply aping into this stuff. You’ve obtained loads of nameless groups.”He says that verified information could assist buyers to decide on tasks extra properly, as legit founding group members can use decentralized IDs to construct up verified contributions to tasks and constructive, provable reputations.Bodily bitcoin assaults (wrench assaults)Of the rising variety of bodily assaults on Bitcoiners documented by Lopp, there’s an rising development of extra incidents being carried out by organized crime. Wrench assaults have occurred on recognized business figures comparable to Ledger co-founder, David Balland, and Lopp himself, which propelled him to erase himself from the web. However in addition they goal so-called crypto influencers who flaunt their wealth on platforms like TikTok and Instagram.Top-of-the-line methods to guard your self from bodily assaults (past elaborate schemes to make your self disappear like a Bond villain) is to be discreet about your way of life. By no means inform anybody how a lot BTC you maintain, and please, don’t taunt your followers to have enjoyable staying poor whilst you’re dripping in diamonds and a Rolex. Edwards remarks:“Clearly, as your wealth will increase, you want to begin private safety about this, however I believe one of many larger issues is a few individuals, whether or not deliberate or simply by way of ignorance, make it very seen what their wealth is, as a result of all of it’s on the ledger. In consequence, you may know somebody’s web value in a approach that you just wouldn’t in conventional banking programs.”Issues can solely get… worseUnlike the D: Ream tune from the 90s (keep in mind that?), it’s unlikely that the state of affairs will enhance at any time. All of the indicators level to it getting worse. Chainalysis warns:“Presently, 2025 is 17.27% worse than 2022 on the finish of June. If this development continues, we may see 2025 finish with greater than $4.3 billion stolen from companies alone.”Yikes. And with the proliferation of AI brokers, cybercrime will tackle a lifetime of its personal, not reliant on a human mastermind behind it. Edwards explains:“All of this [cybercrime] is at the moment largely being achieved by individuals, so there may be somebody someplace who’s going and doing this. The place it’s going to get actually terrifying is the place this may get outsourced to AI brokers, and so they can do it at mass scale. That’s the place it’s going to get actually scary, since you’re not restricted by human capability.”Gulp. I’ve spoken of my reservations about AI earlier than, and I hate to be a Debbie Downer, however in every single place I look, it feels just like the world is falling aside. From scrambles to manage the nuclear codes to AI brokers ready to assault us on-line, is there something inside our management apart from working ourselves up right into a stupor?In line with Chenxing Li, a developer at Conflux Community who offered written commentary about discovering options to this downside, the whole business wants “time to mature in three key methods.” He says:“1. The Take a look at of Time: To see which tasks can ship really dependable and secure merchandise, thereby constructing a trusted model for safety.2. Studying from Incidents: To collectively study from safety breaches and iterate on product designs to patch exploitable flaws.3. Gaining Person Belief: For mature, safe options to steadily change outdated ones and earn widespread consumer adoption.”However with AI growing on the pace of a bullet, and cybercrime so rampantly up, do we’ve time for the take a look at of time? Are the options to fight on-line crime being rolled out quick sufficient? Edwards displays:“Ideally, fast sufficient signifies that you’re getting the tech out earlier than the fraudsters even actually make hay with it. I believe we’re solely seeing that they’re making hay. It’s most likely going to worsen. I believe then there’ll be a swing again the opposite approach, hopefully, however I don’t suppose it’s fast sufficient.”A glimmer of hope on the horizonFortunately, all will not be misplaced. You could possibly take your head out of the sand for a short time and enterprise out on-line in spite of everything. James Toledano, COO of self-custodial web3 pockets, Unity Pockets, identified that, whereas AI could exacerbate the issue, it may also be harnessed for good. He wrote:“This isn’t a shedding battle. It’s a second to strengthen the inspiration. Self-custodial wallets stay inherently safe; most breaches outcome from deception, not technical failure. The answer begins with training: if doubtful, don’t have interaction.Simply as AI is being leveraged by unhealthy actors, it additionally holds huge potential as a protection, enabling real-time rip-off detection, consumer conduct monitoring, and adaptive risk response to revive confidence and drive protected web3 adoption.”Edwards agrees, commenting:“The tech is there to resolve this. The nice factor is it’s not like we’ve this downside and we don’t know what to do about it.”One instance of a undertaking leveraging AI to fight fraud and scams is Algebra Labs, that’s constructing a brand new decentralized alternate (DEX) ruled utterly by bots. Co-founder Vladimir Tikhimorov offered some particulars, saying:“We count on that AI will change many issues in regards to the business, together with risk detection and mitigation. When safety could be automated to react in real-time fairly than post-alert, typically when funds have been stolen, we consider the way forward for digital property will migrate in the direction of most of these platforms fairly than those that proceed to go it the best way they historically have.”As crypto adoption accelerates and the expertise matures, the shadows of crime stay an unavoidable risk. But with a mixture of vigilance, consumer training, smarter safety practices, and evolving expertise like AI, there’s nonetheless a combating probability of avoiding an internet apocalypse. The race between defenders and attackers could also be a relentless cat-and-mouse chase, however simply bear in mind who wound up with the cream.Talked about on this article