Inside the Crypto Mirage: How Fraudsters Exploit Trust, Technology, and Emotion
- drfabiogiacometti
- Oct 19
- 5 min read
Updated: Oct 20
“He contacted me on Instagram in 2022. He wrote about investment opportunities —
cryptocurrencies, NFTs, all the trending buzzwords of the moment.”
So begins the story of one woman who believed she was making a wise move into the future of finance, only to be scammed by Nicholas Coppola* in Italy, as reported by Corriere della Sera this week.
“He spoke about markets with confidence, lived a glamorous life, and convinced me to invest.
Within weeks, the platform disappeared — along with my money.”
Her case is hardly unique. According to data compiled by Chainalysis and Europol, more than
half of all cryptocurrency frauds in 2024 originated on social media platforms, particularly
Telegram and Instagram. Victims aged 25 to 40 accounted for roughly 60% of cases — a
demographic shift that shows scammers now target tech-literate adults, not retirees.
1. The Human Side of Digital Crime
To understand how these schemes work, I spoke with Hanna Adynets, co-founder of T&H
Consulting and a crypto-fraud investigator based in Budapest.
Fabio: Hanna, let me start by asking: how does someone become an expert in crypto fraud?
Hanna: I started nearly ten years ago as a finance intern. Later, after gaining more experience, I founded a consultancy for new investors in Belarus. At the same time, my curiosity about digital assets led me to co-found my own investigations firm in 2019, which we quickly began to specialize in crypto. To build that expertise, I earned my first certification from Chainalysis - the American blockchain intelligence company. That’s really where this whole journey began.
Fabio: What does fraud look like from the inside?
Hanna: It’s surprisingly familiar. The tools have changed, but the psychology hasn’t. Scammers
target people when they’re distracted or emotionally vulnerable — recently divorced, stressed, or lonely. They exploit greed with “guaranteed” profits, or trust with a fake relationship. Once that emotional hook is in, logic collapses.
2. The Anatomy of a Scam
Fraudsters often profile their targets long before making contact. Sometimes it starts with an
innocent message on a dating app or a convincing email “from your bank.” From there, the
victim is led deeper — emotionally or financially — until it’s too late.
Investigators call one version of this the “Pig Butchering” scam: a fabricated online romance or
friendship used to build trust before the inevitable financial betrayal.
In other cases, it’s technical — clicking a poisoned link that installs malware, locks the
computer, or drains a digital wallet.
“Yes, every crypto transaction is visible on the blockchain,” Hanna explains. “But criminals
know how to move funds fast, across borders and through mixers or exchanges that ignore
international cooperation requests. By the time authorities react, the money is already gone.”
3. Institutional Blind Spots
Fabio: Can financial institutions realistically prevent these crimes?
Hanna: Not completely. Technology moves faster than regulation - by nature, regulations are
always reactive. A scam might originate in Hungary, the assets move through exchanges in
Asia, and vanish into private wallets in seconds. Even though each exchange eventually needs a traditional bank to cash out, not all jurisdictions cooperate with European investigators.
Many national police forces still lack the expertise to understand blockchain evidence.
“Sometimes,” Hanna says, “we find ourselves explaining basic terms like wallet or hash during
a criminal report. That’s how far enforcement still has to go.”
4. The Regulation Labyrinth
Fabio: Has the EU’s MiCA regulation improved the situation?
Hanna: It’s a step forward. MiCA sets clear rules for crypto-asset service providers and
introduces accountability. But it’s new, and most local enforcement bodies aren’t yet aligned.
We can trace assets using specialized software . Suspects will try to break the trail by
exchanging crypto for another currency, or they will try to cash out by converting it to fiat. Both
of these actions often require them to use an identifiable Virtual Asset Service Provider (VASP),
like an exchange that enforces KYC — that’s where identity can be confirmed.
The real challenge is coordination. A website might use a European domain, giving victims a
false sense of security, but the servers and legal entity could sit in another jurisdiction entirely.
Technology globalized crime faster than regulators and enforcement could harmonize laws.
5. The Business Perspective
Fabio: What should banks, brokers, and fintechs learn from these cases?
Hanna: Prevention must be proactive. In the United Kingdom, for example, new rules
from the Payment Systems Regulator oblige banks to reimburse clients for most authorized
payment fraud, and they uniquely split the liability 50/50 with the receiving bank. That,
combined with tools like 'Confirmation of Payee' which they've had for years, has forced
British banks to develop strong monitoring systems and customer warnings. Europe still has a
long way to catch up.
Fabio: Can you give a practical example?
Hanna: A practical example is using 'positive friction'. When a UK client initiates a transfer
to a known exchange or risky account, the system triggers a "cooling-off" period or highly
specific warnings, forcing the client to confirm they understand the risks.
But the real solution goes deeper. It's about understanding behaviour - not just how much is
being sent, but how it's being sent. Is a remote access tool running on the customer's computer?
Are they being coached over the phone? Combining these behavioural insights into a real-time risk score is how you predict and stop fraud before the money is gone. And I think this is where AI can be very helpful and used in order to protect the customers, especially the more vulnerable ones.
6. Lessons for Individuals and Institutions
For individuals:
● Never trust financial advice received through social media or messaging apps.
● Verify investment platforms through official financial authorities.
● Keep detailed records (screenshots, wallet addresses, transaction IDs).
● If defrauded, report immediately to your bank, the exchange, and cybercrime authorities.
For institutions:
● Integrate blockchain analytics into AML (Anti-Money Laundering) frameworks.
● Maintain a list of high-risk exchanges and mixers.
● Train fraud and compliance teams in crypto-specific red flags.
● Collaborate early with law enforcement and cross-border regulators
Conclusion
Crypto fraud isn’t a niche cybercrime anymore — it’s mainstream. It thrives on speed,
psychology, and regulatory gaps. Technology has made theft invisible, and shame keeps victims silent.
Until education, enforcement, and empathy evolve as quickly as the scams, the promise of digital finance will remain a playground for criminals — and a warning to everyone who believes the next great opportunity always comes with a blue checkmark.
Using Reputable brokers and Etc of Cryptocurrencies can be a practical solution for novice
investors in ensuring their protection while still enjoying the thrilling experience of the
cryptocurrency market.
*Some news about Coppola's case in english:
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