Update on Fraud Risks of Cryptocurrencies

David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, forensic accounting, and marital dissolution services in Philadelphia and the Delaware Valley.

In his October 23, 2017 blog, forensic accounting expert David Anderson of David Anderson & Associates, Certified Fraud Examiner in Philadelphia, discussed the fraud risks associated with Bitcoin and other cryptocurrencies. Last September, the European Union Agency for Law Enforcement Cooperation (“EUROPOL”) issued its annual report on cyber fraud. The EUROPOL report particularly noted the rise in frauds associated with cryptocurrencies. Anderson will discuss some of the key findings of this report in this week’s blog.

Specifically, the EUROPOL report stated that “A consequence of Bitcoin and other cryptocurrencies becoming more mainstream and a recent spike in value, is that cryptocurrency users and facilitators are subjected to the same attacks aimed at users of traditional financial instruments – attackers now phish for victim’s login credentials for their online exchanger accounts, information stealing malware also hunts for victim’s electronic wallets and private keys, and entities holding stocks of cryptocurrencies, such as exchangers, have become the target for hackers.”

As Anderson noted in the October 2017 blog noted above, these risks are increasing because transactions involving Bitcoin and other cryptocurrencies are anonymous and leave no digital footprint, so once a hacker or other attacker gains access to a victim’s login credentials or the victim’s electronic wallet and private keys, the theft of their cryptocurrency is virtually untraceable.

Furthermore, the EUROPOL report noted that due to significant fluctuations in value over the past three years (Bitcoin, for example, rose from less than $500 in March 2016 to over $13,000 in December 2017, and has since fallen to around $4,000), hedge funds and other investment vehicles are increasingly investing in cryptocurrencies.  This has helped increase investor demand for cryptocurrencies.

The EUROPOL report also noted that the lack of traceability has made cryptocurrencies attractive for money laundering.  This in turn, increases the risk that those who accept payment in cryptocurrencies could be deemed as helping to facilitate criminal activity.

The EUROPOL report concluded that the use of Bitcoin and other cryptocurrencies will continue to increase in the future as will the fraud risks associated with their use.

If you want to learn more about cryptocurrency fraud, advice and assistance is available from a Certified Fraud Examiner working with an experienced firm that provides forensic accounting services in Philadelphia and the Delaware Valley. The Philadelphia forensic accounting firm of David Anderson & Associates can be reached by calling David Anderson at 267-207-3597 or emailing him at

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting, and outsourced CFO services.  Company principal David Anderson is a forensic accounting expert who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.