Crypto Crime Surges in 2025 Amid FOMO and Weak Regulation

Key Takeaways:

• Crypto crime in H1 2025 reached new records, surpassing all of 2024
• Crypto FOMO combined with loose regulations creates conditions for crypto fraud
• 98.7% of tokens on Pump.fun show characteristics of pump-and-dump scams
• Law enforcement agencies face difficulties in combating crypto crime
  

Crypto Crime Situation Reaches Peak

According to cybersecurity experts, a combination of weak regulation, intense crypto FOMO, and rapid adoption is fueling a “super cycle” of crypto crime.

Losses from crypto-related crime in the first half of 2025 have already broken previous records, surpassing the total for all of 2024 and even rivaling the infamous 2022 spike.

Bill Callahan, a former DEA agent and long-time crypto crime investigator, explained that the current environment—marked by excessive hype and regulatory gaps—has created ideal conditions for illicit activity.

“The rapid growth of new crypto assets, especially memecoins, combined with the sudden surge of retail investors and limited regulatory oversight, creates opportunities for crypto crime, including theft, fake investment schemes, crypto fraud, and scams.”

Risk-Reward Ratio Favors Criminals

Callahan explains that crypto fraud attracts bad actors because of its anonymity and ease of execution. “We must remember that bad actors have the time, money, and resources to execute crypto crime perfectly, and they don’t need to get it right every time to still make huge profits.”

According to the H1 Hack3d report by blockchain security firm CertiK, the average loss per security breach in 2025 was $4.3 million, with a median of $103,996—highlighting the scale of damage even single incidents can cause.

Natalie Newson, a senior blockchain investigator at CertiK, said “the convergence of conditions” has made bad actors in the crypto crime field more brazen. “Influencers and those with large reach continue to launch tokens with questionable purposes, profiting through tactics like flash attacks and putting retail investors at risk due to crypto FOMO.”

Pump-and-Dump Scams Proliferate

In May, market surveillance firm Solidus Labs reported that 98.7% of tokens on the Pump.fun exchange exhibited signs of pump-and-dump schemes—one of the most common and damaging types of crypto fraud.

Newson emphasized the growing difficulty law enforcement faces in tracking and prosecuting offenders. International jurisdictional challenges, limited budgets, and increasingly advanced technical methods have widened the enforcement gap.

A recent Chainalysis report underscored the sophistication of laundering techniques being used in crypto crime, noting that many service providers are struggling to keep up.

“The result is a growing gap between illegal activity and accountability, creating an increasingly hostile environment for users and legitimate builders in the crypto space.”

Need Smart Regulation, Not Crackdowns

Hank Huang, CEO of Kronos Research, argued that regulators have “shifted from overzealous to underreacting.” He said that while initial enforcement was “usually very harsh,” it has now gone too far in the opposite direction and we “see too little accountability.”

“That imbalance creates fertile ground for what’s called the crypto crime super cycle. The solution isn’t increased crackdowns; it’s smart, targeted regulation that seeks balance to continue promoting widespread adoption without creating conditions for crypto fraud.”

Zero Loss is an Impossible Mission

Law enforcement has recently intensified efforts to shut down bad actors, including high-profile raids on darknet markets. But Huang cautioned against believing that total elimination of crypto crime is possible.

He said that instead of trying to completely eliminate crypto crime, the focus should be on minimizing risk for users and preventing crypto FOMO from leading to unwise investment decisions.

“Other industries are also affected by crime, but the speed and global accessibility of crypto make it particularly vulnerable to crypto fraud. These attacks don’t just target crypto but aim to test the limits of emerging systems.”