Cryptocurrencies, Fraud, Phishing, Scams

Ensuring top-notch cybersecurity is an essential necessity for businesses to set up shop in the modern business world, and the crypto industry is no exception. Similar to their Web2 counterparts, the crypto landscape fights its own battle against the ever-increasing scams and other security risks. Straightforward scams have transformed into complex, multi-layered operations that pose significant challenges to organizations. As illicit activities become more difficult to crack, the business world dealing with cryptocurrencies is increasingly seeking advanced intelligence and analytics.

Crystal Intelligence, a blockchain analytics firm, addresses this need by uncovering hidden patterns in blockchain transactions. The company provides tools that help businesses detect and prevent illicit activities, identify high-risk entities and comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. By enhancing transparency and security, Crystal Intelligence aims to keep institutions ahead of evolving crypto threats.

Leveraging a team of analysts fluent in many regional languages across the Middle East, North Africa and Asia-Pacific, Crystal Intelligence offers insights that are both globally comprehensive and locally precise. This regional expertise helps clients understand on-the-ground risks and regulatory frameworks, enabling them to operate in complex jurisdictions and effectively mitigate region-specific threats.

In this interview, Crysta Intelligencel’s lead investigator Andrii Sovershyenni and senior investigator Federico Paesano share key insights into the tricky landscape that crypto businesses must navigate and how to be better prepared against crypto scams and frauds.

Cointelegraph: Can you tell us about Crystal Intelligence and its mission in the blockchain and crypto space?

Federico Paesano: Crystal Intelligence helps organizations understand and manage cryptocurrency through advanced blockchain analytics and compliance solutions. Our tools allow for real-time tracking, risk assessment, and detailed analysis of crypto transactions. This makes us an essential partner for compliance professionals, regulators, and investigators in the crypto field.

We also provide training programs. These programs teach clients best practices in the crypto world and equip law enforcement and private sector teams with the skills they need to trace crypto assets.

CT: Crypto scams have evolved significantly over the years. What trends or types of scams have you seen rise the most recently?

FP: The way criminals use cryptocurrency has changed a lot over the years. They have become more skilled and now use new technologies to avoid being caught. Let’s look at the latest changes in this area and see how they have developed.

In the past, scammers used simple tactics to hide their activities. They sent Bitcoin (BTC) through multiple addresses to cash out anonymously via exchanges like BTC-e. However, as regulations became stricter and investigators improved their skills, these basic methods became less effective. The rise of KYC policies and the growing cooperation between centralized exchanges and law enforcement made it much harder for bad actors to cash out without leaving a trace.

In response, crypto criminals are changing their tactics. They are using more complex methods that take advantage of new products and services in the blockchain space. Swaps, token bridges and decentralized finance (DeFi) protocols have become the tools of choice for criminals seeking to cover their tracks.

Scammers and thieves use these technologies to exchange tokens across different blockchains without going through centralized platforms that require identity checks or interaction with authorities. They take advantage of decentralized exchanges (DEXs) and smart contracts to move funds across multiple blockchains quickly, without the oversight that regular exchanges offer. This makes it harder to track illegal activities.

Every day we work with law enforcement agencies around the world. They focus on staying updated on new developments, adjusting to changes, and using the latest tools to track and reveal hidden activities.

CT: Can you walk us through a scenario where your technology helped identify or prevent a scam?

FP: Acting quickly is crucial in every financial investigation. This is especially so when dealing with cryptocurrencies. The difference between stopping a scam and losing money may be mere minutes. This is where Crysta Intelligence’s real-time blockchain analytics can help. Our technology tracks and analyzes crypto transactions as they occur, allowing you to spot illegal activity before it’s too late.

We can quickly label suspicious addresses and entities. Our intelligence team identifies addresses linked to crimes like theft, scams, and hacks, and categorizes them within minutes. This fast response is very important.

For example, if stolen funds are sent to a cryptocurrency exchange to be cashed out or exchanged for other tokens, our advanced monitoring tools alert the exchange’s compliance team as soon as the funds arrive. They can then take action against the illegal source of the funds.

In some cases, this alert can help slow down the flow of stolen funds and may even stop criminals from accessing or laundering the money further. We have many cases where we have been asked to help with investigations. When criminals tried to move funds through multiple digital wallets, our expert investigators noticed unusual patterns. They traced the funds and sent out immediate warnings. Often the exchanges involved will work with us to freeze the funds, and block criminals from cashing out, allowing law enforcement to follow the trail of the stolen assets.

CT: How does Crystal Intelligence help law enforcement in crypto-related investigations? Are there any notable cases where your team played a key role?

FP: When law enforcement investigates crime proceeds in blockchains, several key factors can determine the success of their work.

First, it is essential that the tools are easy to use. A powerful tool is not helpful if it confuses investigators with too much complexity or information. Crystal Intelligence has spent a lot of time improving its user interface to ensure even advanced features are easy to navigate. The graphs and visualizations help investigators see complex crypto transaction patterns clearly without being hard to read. This clarity is crucial in fast-paced situations where every moment matters.

Second, attribution data is vital to connecting crypto addresses to individuals or organizations. Crystal Intelligence helps law enforcement establish these links by showing relationships between addresses, transactions, and known entities. This then lets investigators follow the money and contact relevant institutions or people. Compliance teams also benefit from this data, as it helps them assess risks in customer transactions and spot potential criminal activity.

Finally, the reliability of the data is critical. Crystal’s Intelligence Team works very hard to verify data and gather evidence for accurate attribution and risk scores. This is important as law enforcement agencies must be able to trust the data to act effectively, whether it’s freezing assets or pursuing further investigations.

CT: Blockchain technology is often praised for its transparency, but scams still occur. What are the challenges in identifying and preventing fraudulent transactions on the blockchain?

Andrii Sovershennyi: The largest issue we face is speed. Collecting information about fraud is quite straightforward, but doing it quickly can be challenging.

Blockchain payments are faster than traditional payments. With quick confirmation times, an attacker can receive payment and convert funds very quickly, leaving little time for anyone to act proactively.

At Crystal Intelligence, we are constantly working to speed up how we collect and use labels in our system to help our clients. This challenge gets harder with fraud, as victims often only realize they have been defrauded much later, and they may never get their money back. That’s why it is important to raise awareness about common types of fraud and support trustworthy businesses.

CT: Looking ahead, what do you think the future holds for blockchain security? Are there any emerging threats on the horizon that we should be aware of?

AS: Blockchain security can be very challenging. Many people, including myself, believe that keeping your own crypto instead of relying on exchanges is safer. However, it can be risky if you lose your private key or if it gets stolen.

It’s difficult to comment on emerging threats. But the general rule is that criminals innovate constantly. Attackers are becoming more skilled and have pulled off impressive heists against well-protected targets. Many of these attacks use social engineering, like impersonating customer service, and modern AI tools can help them create convincing fake voices, images, and videos.

I think the focus on security will shift from technology to laws and regulations. Services will need to prove that they take security seriously, and there may be specific rules about how they handle custody.

CT: Finally, what advice would you give to crypto investors or businesses to better protect themselves from falling victim to scams?

AS: Many factors are involved when businesses want to work with cryptocurrency. To start, they should follow the recommendations in open standards like the Cryptocurrency Security Standard (CCSS). This standard offers good policies and guidance. There are also many firms that can help businesses create and apply the necessary security measures.

For consumers, it’s best to choose a licensed and regulated cryptocurrency exchange. Instead of just looking for the 'best cryptocurrency exchange near me', check the list of authorized firms from national financial regulators. While this doesn’t guarantee safety, being regulated means these firms must follow certain rules.

Additionally, you can visit the International Organisation of Security Commissions (IOSCO) to find information on investor protection. They have a list of services that warn about potential issues. Their site also has many valuable free resources for learning about investments, which can help you assess the opportunities you come across.

Crystal Intelligence’s website provides a wide range of resources for victims of cryptocurrency scams and helps businesses improve their security through education and awareness.

Find out more about Crystal Intelligence

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