Preventing Cryptocurrency Scams in 2025: Emerging Strategies and Policy Innovations for a Safer Fintech Ecosystem

Cryptocurrency scams cost investors an estimated $9.9 – $10.7 billion globally in 2024, driven largely by AI-generated fraud and pig butchering schemes. Generative AI has industrialized fraud at an unprecedented scale, exploiting crypto’s decentralized nature with deepfake impersonations, phishing exploits, and automated chatbots. 

Pig butchering is a sophisticated scam blending romance and investment fraud. Scammers build trust with victims over months through dating apps, social media, or random texts, then shift communications to WhatsApp or WeChat. Posing as trusted friends or lovers, they persuade victims to invest in fake crypto assets or convert cash to crypto via ATMs. The term “pig butchering” reflects how scammers “fatten up” victims with attention before exploiting them financially. 

The devastating impact of these scams extends beyond financial loss. Once funds are transferred, recovery is extremely unlikely, devastating victims and their families. The broader impact of these scams is profound. The true cost far exceeds the reported figures, as many victims, embarrassed or unaware of reporting channels, remain silent. Tragically, some are driven to suicide, leaving families to cope with their loss. “He died embarrassed, ashamed, financially devastated, heartbroken. And if sharing our story helps somebody else or another family, then it’s worth it,” said a daughter whose father died by suicide after a pig butchering scheme in a CNN interview.

Stopping fraud before payments are sent is critical to protecting users and preserving trust in the fintech ecosystem. In the U.S., outdated approaches and fragmented policies have left consumers vulnerable, eroding confidence. This article explores emerging strategies and policy innovations to combat crypto scams in 2025, emphasizing pre-transaction safeguards, public-private collaboration, and regulatory advancements to build a safer fintech future. 

The Crypto Scam Landscape: Why Pre-Payment Matters

The scale of crypto fraud in 2024 underscores the severity of the issue. Three recent cases illustrate the stakes. 

In August 2024, the Securities and Exchange Commission (SEC) charged NovaTech Ltd. with operating a $650 million Ponzi scheme, defrauding over 200,000 investors, many from the Haitian-American community. From 2019 to 2023, NovaTech ran a multi-level marketing (MLM) and crypto investment program, promising profits from forex and crypto markets. Instead, it used most funds to pay existing investors or commissions. The platform’s collapse left victims with frozen withdrawals. 

In September 2024, Malone Lam and Jeandiel Serrano were indicted for stealing $230 million in Bitcoin from a Washington, D.C. victim. Using social engineering, they posed as trusted contacts via texts and dating apps, tricking the victim into transferring 4,100 Bitcoin to a fake investment platform. The funds were laundered through mixers and exchanges, then spent on luxury goods like cars and jewelry.

In May 2025, the U.S. Department of the Treasury sanctioned Funnull Technology, Inc., a Philippines-based tech company, for facilitating pig butchering scams. Funnull registered over 330,000 scam domains mimicking legitimate crypto platforms. It achieved this by purchasing a repository of code used by web developers, then maliciously altering it to redirect visitors from legitimate websites to fraudulent websites linked to Chinese criminal money laundering operations.  

All three cases could have been prevented with pre-transaction checks, such as verifying platform legitimacy (e.g., who is behind the infrastructure your platform touches?), using blockchain analytics to flag suspicious wallets, or recognizing red flags like unrealistic returns. Pre-payment intervention is the cornerstone to effective fraud prevention. 

Emerging Strategies to Stop Fraud Before Payment

While sanctions on countries facilitating scams are valuable and should be implemented, they are often reactionary, addressing fraud after it occurs. Proactive prevention through innovative technologies and public-private collaboration is essential to stop scams before funds are transferred. The borderless, instantaneous nature of cryptocurrency demands real-time data sharing and streamlined processes to bridge gaps in outdated systems. Several standout initiatives and tools are leading the charge:  

Group-IB: Real-Time Fraud Detection
Group-IB provides pre-transaction risk signals through its Unified Risk Platform, which is built on a Cyber-Fraud Fusion approach that integrates device intelligence, user behavior, and threat intelligence. Instead of just analyzing transactions, it assesses the full context of a user's digital session in real-time. Key differentiators in combating sophisticated crypto scams include:

Advanced Device Intelligence: Using patented Global ID technology, Group-IB identifies and links fraudsters' devices across different services and platforms, exposing large-scale fraud rings behind fake investment schemes.

Behavioral Analytics: Detects anomalies in user behavior that can indicate coercion, a key element in stopping "pig butchering" scams before the funds are lost.

Threat Intelligence Integration: Proactively identifies and blocks connections to malicious domains and infrastructure used to host fake crypto exchanges, directly countering tactics like those used by Funnull Technology.

Collaborative Intelligence: For financial institutions, its Cyber Fraud Intelligence Platform (CFIP) enables secure, real-time sharing of pseudonymized intelligence on mule accounts, which is crucial for disrupting crypto laundering chains.

This holistic approach empowers institutions to halt suspicious transactions with high accuracy, minimizing disruptions for legitimate customers while defending against constantly evolving fraud schemes.

KnowScam: Empowering Users, One Scan at a Time
Powered by Scamnetic, KnowScam’s Scan & Score app puts users in control of their digital safety. The tool verifies messages and calls in real time, detecting red flags like mismatched phone number locations (e.g., someone claiming to be local but pinging from overseas) or suspicious sender patterns.

By breaking down risk factors into easy-to-understand insights, Scan & Score helps users confidently distinguish scams from legitimate communications - especially in emotionally charged or unclear situations.

Many scam victims hesitate to ask for help, feel defensive, or don’t realize they’re being manipulated. KnowScam empowers them with immediate, judgment-free feedback - promoting informed, independent decision-making and reducing vulnerability.

Operation Shamrock: Collaborative Awareness
Operation Shamrock unites over 2,000 local, state, federal, and international partners to combat crypto scams through education, mobilization, and disruption. This coalition takes a holistic approach to fighting scams, tackling the issue from every angle. Supported by public and private sectors, including law enforcement, financial institutions, and victim services, Operation Shamrock offers webinars and training on cryptocurrency investigations and asset seizure. It also educates the public on red flags and shares stories from scam victims to encourage learning. 

Kodex: Streamlined Data Requests
Kodex provides a unified portal for subpoena and data request processing, replacing inefficient methods like email, fax, or snail mail - all methods still currently used by law enforcement. By enabling secure collaboration between financial institutions and verified law enforcement agencies, Kodex ensures requests are legitimate, reducing operational costs and strengthening compliance. This streamlined process accelerates investigations and enhances trust.

The Perspective and Process
From a victim’s perspective, these initiatives provide layers of protection. You’d have the power to verify the legitimacy of a text or email yourself - a safety check we should normalize. Meanwhile, your financial institution would analyze transactions in real-time, scanning for fraudulent patterns. A strong regulatory compliance framework then enables instant processing of law enforcement requests, replacing inefficient manual verification with secure, efficient systems. These individual protections, enabled by innovative tools, collectively form a strong framework to combat crypto scams on a broader scale.

Building A Unified Defense
Together, these initiatives create a proactive, multi-layered defense against cryptocurrency scams. By integrating these strategies - user empowerment, real-time analytics, cross-industry collaboration, and streamlined data sharing - prevention is prioritized and scams are effectively stopped before they devastate lives. This unified strategy strengthens the fintech ecosystem, empowering individuals and restoring their confidence financially.

Policy Innovations to Bolster Pre-Payment Protection

Regulatory advancements are essential to scale pre-payment protections against cryptocurrency scams. There are several global and regional efforts gaining momentum in 2025, each assisting with stopping fraud before funds are transferred.  

Global Cooperation: FATF & INTERPOL
International collaboration is key to tracing and recovering illicit crypto funds. The Financial Action Task Force (FATF) emphasizes cross-border information sharing, urging countries to implement mechanisms for mutual legal assistance, including non-conviction-based forfeiture (Recommendations 4 and 38). INTERPOL’s Silver Notice, increasingly used in the EU, facilitates tracing and recovering laundered assets, enabling member countries to pursue seizures through mutual legal assistance treaties (MLATs) or bilateral requests. INTERPOL’s upcoming General Assembly in October 2025 will discuss enhancing Silver Notice adoption, offering a platform for global law enforcement to align on crypto fraud prevention. While adoption remains inconsistent, these frameworks signal a global commitment to streamlined asset recovery. This is complemented by crypto regulatory advancements in the UK, EU, and U.S.

UK: Draft Regulations
The UK is tightening its oversight of crypto to prevent scams. The 2025 draft regulations bring crypto exchanges under the Financial Conduct Authority’s (FCA) financial services framework, mandating pre-transaction AML/KYC checks. These rules require verifying user identities and screening wallets against sanctions lists and known scam addresses. Blockchain analytics tools enable real-time transaction monitoring, potentially preventing scams like the NovaTech or Lam/Serrano cases. The high failure rate of FCA registration applications due to weak KYC processes highlights the urgency for compliance and regulation. 

EU: Markets in Crypto-Asset Regulation (MiCA)
The EU has standardized rules to enhance transparency. MiCA, effective December 2024, standardizes rules for crypto assets not covered by existing financial legislation. It mandates that exchanges and Crypto-Asset Service Providers (CASPs) use advanced monitoring systems to detect unusual patterns, verify identities, and track transactions. These requirements enhance market integrity and transparency, reducing the risk of fraud across member states.

U.S.: Stablecoin Legislation
The U.S. is adopting stablecoin legislation to curb fraud. Proposed legislation like the GENIUS Act and STABLE Act emphasizes AML and KYC compliance for stablecoins. While not explicitly requiring pre-transaction screening, the focus on identifying users and assessing risks necessitates real-time monitoring. Tether’s proactive freezing of scam addresses could become a regulatory standard, embedding pre-payment checks into compliance frameworks.

These policies, combined with technological advancements, establish a foundation for proactive fraud prevention. However, uneven global adoption and implementation challenges remain. By advocating and adopting consistent global standards, we can help the industry lead the change and shape a safer fintech future for all consumers.  

Challenges and Trade-Offs

At the 2025 International Association of Financial Crimes Investigators (IAFCI) Cyber Fraud Summit, I spoke on preparing agencies for asset forfeiture cases involving cryptocurrency, emphasizing the growing prevalence of scams and the urgent need to support victims. A powerful AARP interview at the Summit highlighted the human cost of these scams. Their interview with a resilient romance scam survivor revealed she lost her life savings, having withdrawn hundreds of thousands from her retirement accounts and ultimately declaring bankruptcy. She wished her financial institution had questioned her unusual, urgent withdrawals, which raised clear red flags. She believed her online research had vetted her scammer as real, but lacked awareness of available resources to verify authenticity. Her story highlights the need for proactive intervention, even when it requires a difficult conversation.

The FBI’s Operation Level Up, which involved door-to-door outreach to potential victims, proved effective but is not scalable. Education gaps, particularly among older adults, and friction in adopting two-factor authentication (2FA) further complicate prevention efforts. Balancing user privacy with fraud detection and ensuring scalability are significant hurdles, while overcoming resistance to new technologies demands urgent industry action.

Conclusion: Building a Safer Fintech Future

As members of The Financial Club, we have a unique opportunity to lead our industry in implementing the necessary changes to combat fraud before it occurs. By prioritizing pre-payment fraud prevention - through AI-driven analytics, user empowerment tools, public-private collaboration, and strong regulations - we can protect consumers and restore trust in the fintech ecosystem.

Currently, we are one step behind the criminals and the number of fraud victims is growing. The U.S. cannot continue its fragmented approach to fighting crypto fraud, nor should any country,  given the innovative tools and companies available. With cutting-edge companies like Group-IB, Knowscam, and Kodex, and coalitions like Operation Shamrock leading the way, the industry has the talent and resources to stay ahead of criminals. Success, however, requires prioritizing fraud prevention and fostering cross-industry cooperation. 

Let’s work together to drive meaningful change, ensuring a safer, more resilient fintech future in 2025 and beyond.