In 2024, crypto scams will cost $9.9 billion, and 90% of crypto apps in the UK will fail AML checks. To fight fraud, the industry needs to share data.
The crypto business is changing the way money is handled, but there’s a truth that’s just below the surface. The amount of money lost to cryptocurrency scams reached a record high of $9.9 billion in 2024, and the outlook for 2025 is even worse.
The global fraud epidemic is having a big effect on the industry and customer confidence. It comes in many forms, including “old wine in new bottles” scams like Ponzi and pump-and-dump schemes and new crypto-specific frauds like address poisoning.
Criminals are abusing the sector more and more to hide the money they make from scams in the traditional finance (TradFi) sector. Anti-Money Laundering (AML) rules are always changing, which makes it hard for businesses to stay in line with them. In the UK, weak AML and fraud rules mean that almost 90% of crypto registration requests are turned down.
Use of the crypto field
The crypto sector is working hard to improve its image in the eyes of global regulators, and they are aware of this abuse. Many regulators are now looking to control the sector beyond the AML perimeter. Individual companies’ efforts, like tools that report industry scams and operations that cause problems, are admirable, but they will only have a small impact when done by themselves.
Sharing information to fight financial crime needs to be done in a much more bold way by the business.
Cross-sector sharing of public and private data to fight fraud is quickly becoming the norm in the TradFi industry. In Singapore, financial services and telcos are required to share anti-scam data with each other. In Australia and the UK, plans run by the industry encourage people to share data voluntarily. Data sharing is seen as one of the best ways to fight global fraud.
Related: Tools for blockchain compliance can cut down on TradFi costs: Co-founder of Chainlink
This wave of crime around the world can only be stopped by connecting the fake value chain. International fraud is getting used to the new way money works, but the digital assets community is missing from this process. Getting the community involved in current efforts to share data will not only help to make the ecosystem stronger, but it will also be good for the industry as a whole.
From theory to action
The business world should do three things.
First, the fact that crypto isn’t widely used as a payment method right now means that even the most dedicated crypto thief can’t live alone. How crypto and fiat currencies are “on-ramped” and “off-ramped” are important parts of the fight against crypto-linked scams. Not sharing info slows down work because no one can see the whole picture.
Second, using crypto in the process of fraud laundering makes AML harder. As new rules take effect and officials crack down on exchanges, the industry needs to boost its defenses against laundering of fraud proceeds. It can’t do this without the necessary data flows to find people trying to get into their environment and stop them. To get these data flows, it needs to go further up the value chain.
Third, people in the digital assets community are becoming more determined to fight scams, but compliance as a field of work is still very new. It would be helpful for the industry to have hard data and the knowledge of experienced fraud prevention experts from other fields, for whom new kinds of fraud are “business as usual.”
It’s clear why sharing data across industries is a good idea to stop crypto-linked fraud, but what needs to happen to make the theory work?
Speeding up teamwork
The UK might have policies that make it easier for companies to share data across sectors for the first time.
The Information Commissioner’s Office, which is in charge of privacy in the UK, recently made it clear that “data protection is not an excuse when tackling fraud and scams.” This is especially important for recent crimes. In one case, scammers stole $1.2 million by pretending to be police officers and crypto wallet hosts to get people to give them personal information.
The Data (Use and Access) Act 2025, which makes preventing crime a “recognized legitimate interest,” has recently changed the rules on data protection. This makes the legal case for sharing even stronger.
Next, the UK’s plans for regulating digital assets include both positive and negative incentives to stop scams and share data. The UK Chancellor’s announcement about future rules makes it very likely that the digital assets business will have to follow the same rules for protecting customers as the traditional financial services sector. It’s hard to think how UK consumers would be protected against fraud without sharing data across industries.
The Financial Conduct Authority, which is supposed to be the future regulator for digital assets, has said that sharing data is a key way to stop people from laundering money from crime.
The UK also has a strong system for sharing financial crime data that includes strong collaboration between the government and businesses, as well as collaboration within industries and between sectors. One example of this is the Joint Money Laundering Intelligence Taskforce. These programs are already being opened up to the digital assets business. If the government and regulators back them up, they could move faster.
The people who work with crypto and digital assets are well aware of the risks to their reputations and the rules that come with the fraud situation. But acknowledgment isn’t enough, and work shouldn’t be kept separate. Sharing data across industries is a key part of stopping scams around the world. Because of its good conditions, the UK is in a unique position to set a good standard…