TECHNOLOGY
Crypto fraud is real — How practitioners can help prevent it By Dr. Sean Stein Smith, CPA, DBA, CMA, CGMA, CFE, City University of New York-Lehman College
Blockchain and cryptoassets are increasingly part of mainstream financial markets and accounting conversations. Decentralized finance (DeFi), non-fungible tokens (NFTs), the
• Fraud and theft related to DeFi activities (a red hot area)
rapid proliferation of stablecoins and the continued research
totaled $10.5 billion during 2021.
around central bank digital currencies (CBDCs) are just a handful of the major topics that have burst into mainstream conversation in the past year. Alongside this innovation and creativity, however, has been an uptick in fraud risks for investors and clients. There have been several recent high-profile examples of fraud that should
• Social media platforms, including YouTube and Twitter, have been used to spread dozens, if not hundreds, of cryptorelated scams. • Hit shows like Squid Game on Netflix can be leveraged to defraud investors out of millions.
catch the attention of practitioners. It is also worth noting that
• People are investing millions into NFTs and the metaverse
the crypto sector has incurred nearly $2.5 billion in fines since
(virtual/augmented reality) without truly understanding the
its inception. Consider the following:
implications of doing so.
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