Crypto Security
Lesson 11
11 min

Cybercrime: scams, hacks, and financial attacks

The age of the internet has undoubtedly had many positive effects on our world and this ever-growing digital environment has facilitated remarkable connectivity and collaboration. Never before have our industries and institutions been as accessible as they are today, with benefits for both individual users and organisations. The advantages of an interconnected and open digital ecosystem are clear - but with openness comes vulnerability. The threat of cybercrime looms over the online world as bad actors exploit and prey on businesses, governments and individuals alike. Brand reputation, revenue, savings, and intellectual property are just a few of the targets at risk from an array of scams and digital attacks. The advent of blockchain technology, machine learning and artificial intelligence (AI) is also adding further complexity to the issue as they represent both potential problems and solutions to this illegal activity. Read on as we delve into the world of cybercrime and explore ways you can protect yourself online and deter threats/attacks.

What is cybercrime?

Cybercrime is any criminal activity that uses or targets a computer, network, or digital device connected to a network. Typically, cybercrime is a profit-focused activity executed by individuals or organisations whose primary goal is to steal money, though some hackers will also look to acquire personal and private data or intellectual property. In some cases, cybercrime may involve deliberately damaging computers or incapacitating networks for political reasons or to inflict reputational harm. 

Recent high-profile examples of cybercrimes include the 2011 PlayStation network hack and the 2021 Colonial Pipeline ransomware attack that saw major disruption to the gasoline supply of 17 U.S. states. 

Cybercrime and Cryptocurrency 

Bitcoin and most other cryptocurrencies are based on decentralised blockchain technology, meaning there is no central authority or owner. The networks are typically peer-to-peer (P2P), which gives people the flexibility to directly transact with one another without the need for a middle entity or payment processor. Additionally, these networks ensure transparency, as all transactions are recorded on a blockchain. The utility and freedom of this system are further underlined by the speed of transactions and the borderless nature of cryptocurrency as the physical distance between sellers and buyers is made irrelevant. 

These positive aspects of cryptocurrency are what have made it so popular with the wider public. Unfortunately, they are also the same reasons why cryptocurrency is widely used in the world of cybercrime. Though regulation has increased in recent times, bad actors still look to take advantage of crypto’s anonymous and decentralised system, using it to disguise transactions and avoid detection. 

Different types of cybercrime

The approach, execution, and impact of cybercrime can vary based on the focus of the attack. For example, hackers that are focused on acquiring confidential data may use malware or phishing tactics, whereas others looking to shut down the operational capacity of a network could utilise a distributed denial-of-service (DDoS) attack.

Let’s take a closer look at the most prevalent types of cybercrime:



Phishing attempts are probably one of the most common cybercrimes on our list and one you’ve likely experienced first-hand if you’ve ever received a spam email. Essentially, phishing is a way for hackers to extract data, or infect systems with malware via fraudulent emails, social media direct messages, telephone calls or SMS texts. Typically, these bad actors will trick users into clicking a link, opening an email, or downloading an app under false pretences. For example, a hacker may send you an email pretending to be your CEO or boss and encouraging you to divulge your login credentials, or they could pretend to be a representative of your bank that needs your personal information or password to approve a transaction. Whatever the case, once these hackers have access to a system or account, they can inflict a lot of damage resulting in identity theft and/or significant financial loss.

Vishing (voice phishing)

Fraudsters are now also taking to phone and social media apps with voice-call functions in a scamming technique known as “vishing”, or voice phishing. This involves scammers contacting victims via phone, WhatsApp, Telegram or Discord, and attempting to manipulate individuals into sharing sensitive personal information. Scammers may say that they are a business or a service where you have an account and they will try to manipulate you into sharing information like your name, address or password. 

The scammers’ goal here is to gain your credentials in order to access your accounts or finances. So be cautious of unsolicited phone calls, even with caller ID, and do not provide any sensitive information over the phone unless you are certain of the caller’s identity.

Email scams

The intentions behind email scams can vary: Some emails contain phishing links to fake web pages designed to steal your credentials, and other scam emails might have malicious attachments or malware. In any case, it pays to be wary of any emails that look suspicious. Always double-check the sender’s name and email address, even if it is a name you recognise - fake accounts are easily created and legitimate accounts can also be hacked and used for nefarious purposes. Also make sure to hover over a link before clicking on it, and better yet, navigate to a web page yourself manually through your browser.


Malware is an overarching term for any malicious software specifically designed to infiltrate, corrupt, or damage computers, devices, networks and servers. One of the most common types of malware is the Trojan Horse which is disguised as a legitimate link or app and, once clicked or installed, will allow attackers to steal data and have full access to the system. Keylogger malware is another covert tactic that can be used to gather sensitive information by recording entries made on a keyboard, giving cybercriminals potential access to passwords and PIN codes.


Ransomware is a type of malware that encrypts files, data, and operating systems, holding the victim’s devices and networks hostage until a ransom is paid. Though in the past bad actors requested the ransom to be paid in the form of electronic cash payments, more recently cryptocurrency has been the payment of choice. The Colonial Pipeline ransomware attackers, for example, demanded around 75 Bitcoin ($5 million U.S. dollars) for the decryption key to release the system. 

Ransomware attackers will typically use extortion tactics, such as the threat of leaking sensitive data, to pressure victims into complying with their demands. However, when cybercriminals target larger organisations, there can be a knock-on effect as acceding to these threats can cause lasting reputational damage to a company’s brand.


Identity theft and account takeover 

Identity theft is where a criminal steals confidential data such as name, address, and other personal information to impersonate the victim and use their identity to commit fraud e.g. obtaining loans, credit cards etc. 

Account takeover (ATO) is a form of identity theft and occurs when cybercriminals use stolen information such as login credentials to access and abuse accounts e.g. by making multiple purchases. Furthermore, once these attackers have access to an account, they can conduct an array of fraudulent activities including stealing sensitive data, creating phishing emails in the victim’s name, or accessing additional accounts within an organisation. ATO usually occurs as a result of users repeating their passwords on various websites. Consequently, bad actors can exploit this weakness and commit fraud across multiple accounts.

Ponzi schemes 

Considered one of the archetypal forms of financial fraud, a Ponzi scheme is where an individual scammer or fraudulent organisation asks a victim for financial investment in their enterprise with the promise of little risk and high returns. Essentially, the scammers generate returns for existing investors from the money acquired from new investors. While traditionally scammers would require fiat payment, cybercriminals are now focusing on cryptocurrency-based scams, asking ‘investors’ to send crypto to a wallet address as an initial investment. Crypto payments are particularly desirable for these culprits as it’s anonymous and the transactions are irreversible.

Distributed Denial of Service (DDoS)  

A distributed denial-of-service (DDoS) attack is when cybercriminals focus on exploiting the capacity of a server, service or network by overwhelming the targeted system and its infrastructure with a high volume of internet traffic. DDoS attacks will typically send multiple requests to choke the system, meaning legitimate traffic cannot access the website or service. For businesses like Google (2017) and Amazon (2020) that both experienced high-profile DDoS attacks in recent years, this disruption can not only cause a substantial impact on the customer experience but also a significant loss of earnings as every moment a user cannot access a website or app costs the business money.

Initial coin offering scams 

An initial coin offering (ICO) is a way for companies to raise money in order to develop a new coin, app, or service and the coins issued to investors in an ICO also can hold utility for a future service or product. Though considered a new and exciting way to crowdsource funds, it is also susceptible to abuse as ICO scams are becoming a common way to exploit potential investors. In these scams, a company or individual will create a new cryptocurrency and offer it for sale to the public. They’ll make false claims about the potential of the cryptocurrency on their website or in a whitepaper, and then disappear with the money that has been raised.

At Bitpanda, we conduct rigorous research and perform our due diligence before adding any new coin to our platform. In the world of investing, new assets spring up constantly, but this doesn’t mean that all of them are legitimate investment opportunities. To ensure our customers’ safety, our asset listing committee takes the time to thoroughly assess and confirm the legitimacy of every digital asset we look to add to the Bitpanda platform.


Cryptojacking is when a cybercriminal covertly uses a victim’s computer to provide processing power to mine cryptocurrency. This typically occurs as a result of victims clicking malware that gives attackers access to their computers, who will subsequently install mining software and collect cryptocurrencies such as Bitcoin and Monero. The main signs that an organisation or individual is a victim of cryptojacking include a decrease in device performance, lack of processing power, battery overheating, and an increase in electricity consumption.


Artificial intelligence and machine learning

Though the recent advancement in artificial intelligence (AI) technology (e.g. ChatGPT) has unlocked new potential revenue streams for businesses, it has also opened the door for hackers to exploit and target existing systems, processes, and individuals. The current email phishing techniques utilised by hackers to prey on victims work by sending thousands of generic emails that mimic an organisation or senior individual with the hope of users slipping up and sharing their information. Unfortunately, AI can make this process even easier and more efficient for hackers as this technology can target people in a more intelligent and personal manner. This is particularly dangerous if hackers use AI to focus on ‘spear-phishing’, which is aimed at the leadership of companies or organisations that possess ubiquitous access to valuable information. 

On the flip side, many companies have used machine learning to thwart cyber attacks, particularly phishing schemes. Machine learning is an area of AI devoted to the development of computer systems that are able to learn, adapt, analyse, and draw inferences from patterns and anomalies in data via algorithms and statistical models. Essentially, machine learning can enhance an organisation’s cybersecurity by providing a way to predict and mitigate sophisticated threats from cybercriminals based on a combination of indicators from previous attacks e.g. identifying malicious links, analysing email headers, highlighting unusual calls to action etc. Therefore, while AI and machine learning may cause problems going forward, they may also end up being one of the solutions to slowing cybercrime.

Protect yourself against cybercrime

There are several simple precautions you can take to keep yourself safe against potential cyber threats: 

  • Be alert to emails asking you to perform an action or divulge personal information

  • Use strong, long passwords that are difficult to guess, using a password manager will help you remember them 

  • Enable two-factor authentication whenever possible, which requires a second form of verification in addition to your password.

  • Do not provide sensitive information over the phone and be cautious of unsolicited phone calls from callers whose identity you cannot verify.

  • Hover over links before clicking them and make sure you know the domain you will be redirected to.

  • Look out for any spelling and grammar errors in suspicious emails or text messages as these could be an indicator that it’s a scam.  

  • Whether via email, phone or text message, do not provide any sensitive information or credentials when you can’t verify the identity of the person asking for them.

  • Hover over links before clicking them and make sure you know the domain you will be redirected to

  • Check your bank account statements and credit scores for irregularities

  • Use official sites for payments and transfers 

  • Do your own research and take the time to read all of the available information about any new coin, project, or exchange before you decide to invest.

Don’t forget to also check out our previous articles for ways to spot online scams and crypto scams.

This article does not constitute investment advice, nor is it an offer or invitation to purchase any digital assets.

This article is for general purposes of information only and no representation or warranty, either expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this article or opinions contained herein. 

Some statements contained in this article may be of future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events which differ from those statements. 

None of the Bitpanda GmbH nor any of its affiliates, advisors or representatives shall have any liability whatsoever arising in connection with this article. 

Please note that an investment in digital assets carries risks in addition to the opportunities described above.