FOMO, Lax Rules Are Fueling the Crypto Crime Supercycle
The world of cryptocurrency has been plagued by a growing number of cybercrimes, with losses reaching a staggering new record in the first half of 2025. The phenomenon is often attributed to a perfect storm of factors, including fear of missing out (FOMO), lax regulations, and the increasing adoption of crypto assets.
According to retired DEA agent Bill Callahan, a lack of regulation has created an environment where bad actors can thrive. "Bad actors can make plenty of mistakes and still 'make a handsome profit'," Callahan told Cointelegraph. While he doesn't necessarily call it a crime supercycle, the lack of oversight has undoubtedly contributed to the rise in crypto crimes.
The risk vs reward ratio favors crypto criminals, who are drawn to the anonymity and ease of setting up scams. Blockchain security firm CertiK reported that the average loss per security incident in 2025 has been $4.3 million, with the median loss being $103,996. Natalie Newson, a senior blockchain investigator working for CertiK, attributed this surge to "a convergence of conditions" that have emboldened bad actors.
Newson pointed out that influencers and key opinion leaders continue to launch tokens with questionable intent, leaving retail investors exposed to tactics like sniping. At the same time, law enforcement agencies around the world face significant challenges in combating crypto crimes, including limited resources, cross-jurisdictional complexities, and the technical sophistication of cybercriminals.
A recent report from blockchain analysis firm Chainalysis highlighted money laundering techniques as a particular challenge for law enforcement agencies and crypto service providers. Newson speculated that increased smart contract security and user education could turn the tide, but acknowledged that there is no way to completely eliminate crypto losses.
Regulators Struggle to Keep Pace
CEO of Kronos Research, Hank Huang, argued that regulators have swung from overreach to underreaction. "While early enforcement was often harsh, it's now swinging too far the other way, and we're seeing too little accountability," he said.
Huang pointed out that despite increased crackdowns on darknet marketplaces worldwide, losses from crypto crime will never hit zero due to decentralized markets with anonymous participants. Instead of trying to eliminate crypto losses, he suggested that the focus should be on minimizing risks for users.
The Impact of FOMO and Lax Regulations
Fear of missing out (FOMO) has played a significant role in fueling the crypto crime supercycle. The hype surrounding new tokens and projects has created an environment where bad actors can capitalize on unsuspecting investors.
Lax regulations have also contributed to the rise in crypto crimes. With few safeguards in place, criminals can easily set up scams and walk away with their profits. As Callahan noted, "it's not just about the money – it's about the ease of doing it."
A Growing Challenge for Law Enforcement
Law enforcement agencies around the world are facing significant challenges in combating crypto crimes. From limited resources to cross-jurisdictional complexities, these agencies are struggling to keep pace with the rapidly evolving landscape.
Newson pointed out that increased smart contract security and user education could help turn the tide. However, she acknowledged that there is no way to completely eliminate crypto losses due to the inherent nature of decentralized markets.
A New Era for Crypto Security
As the crypto space continues to evolve, it's clear that a new era of security measures is needed. Increased smart contract security and user education can help minimize risks for users, but it's also essential to acknowledge that crypto crimes will never hit zero.
"Other industries are getting hit too, but crypto's speed and global access make it especially vulnerable," said Huang. "These attacks are less about targeting crypto and more about testing the limits of emerging systems."