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A Review: Fraud Prospects in Cryptocurrency Investment

Velani, Janki ; Patel, Dr. Suchita (2023) — International Journal of Innovative Science and Modern Engineering

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DOI: 10.35940/ijisme.e4167.0611623 (opens in a new tab)

Type:   Journal Article
Country:   United States
Tags:   AI-Enabled Fraud, Cryptocurrency Fraud, Dating Scams, Money Mules, Offender Tactics, Phishing Detection, Pig Butchering, Prevention, Romance Scams, Wallet Security
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Synopsis

            
The publication surveys fraud risks associated with cryptocurrency investment and frames the topic as a review of how investors can be deceived and how schemes might be detected or prevented. It describes the basic technology behind cryptocurrencies, including blockchain and cryptography, and it notes that while such digital assets can offer opportunities, they are exposed to volatility, regulatory uncertainty, and security vulnerabilities. The authors enumerate a broad spectrum of scams that have appeared or been discussed in the literature, including investment schemes, rug pulls, romance scams, phishing, man-in-the-middle attacks, giveaway and employment scams, fraudulent initial coin offerings, shady exchanges, fake wallets, ponzi schemes, and pump-and-dump activities. They also discuss scam dynamics such as social-media outreach, fake managers or celebrities, and promises of high returns with little risk. In terms of approach, the paper reviews existing detection and prevention methods as described by the authors, including technical measures like multi-factor authentication, and research-driven approaches such as graph-based features and transaction-pattern analysis to identify phishing and other fraud patterns. It references proposed blockchain- and blockchain-enabled solutions aimed at improving authenticity, such as a blockchain-based scheme to authenticate checks and support revocation, and mentions the use of machine learning techniques and network- and transaction-level analyses as avenues for improving detection. The authors also discuss user guidance, emphasizing cautious behavior, wallet security, and avoiding high-pressure or “guaranteed profit” schemes. The article concludes that while cryptocurrency can support investment and financial growth when used carefully, there remains a substantial risk of fraud without robust awareness, security practices, and technical safeguards. It signals that future work includes developing detection and prevention techniques and applying blockchain-based controls to mitigate fake-check and other fraud pathways, though it maintains a focus on precaution and protection rather than offering actionable investment guidance.

          

        
                  

            
Identified Gaps

            
The paper identifies low user awareness and limited knowledge of cryptocurrency fraud as practical prevention gaps. It also notes the absence of an instant solution for authenticating checks and detecting fake-check fraud. More broadly, the discussion does not provide empirical evidence evaluating cryptocurrency scam prevalence, victim outcomes, or the proposed trust-factor approach.

          

        
                  

            
Methods

            
This is a narrative review that lists cryptocurrency scam types, describes common tactics, and summarizes detection and prevention measures. It discusses graph-based phishing detection, blockchain-based check authentication, wallet-security practices, and multifactor authentication. The article does not report a systematic review protocol, original dataset, participant sample, or experimental evaluation.

          

        
                  

            
Limitations

            
The article provides descriptive claims without reporting a search strategy, inclusion criteria, data collection, or comparative evaluation of cited methods. Its proposed prevention and detection approach is not specified or tested in the paper. Romance scams are addressed only as one category among many cryptocurrency frauds, so the paper offers limited direct evidence about relationship-based fraud.

          

        
                  

            
Future Work

            
Develop and evaluate a cryptocurrency fraud prevention and detection method based on transaction trust factors. The paper also proposes a blockchain-based scheme for authenticating checks and detecting fake-check scams, with privacy-preserving information sharing between banks.

          

              

    
    

        
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