The Pandemic Sparked a Golden Age of Crypto Scams

Crypto numbers can be unreliable—according to some studies, up to 90 percent of trading on most exchanges is “wash trading,” fake trades designed to generate a false impression of volume, which in turn attracts more traders and influences prices. But the numbers we do have, while approximate, speak to a booming industry defined largely by volatile speculation and fraud. In 2021, consumers spent an estimated $25 billion dollars on NFTs (a crypto sub-industry in which wash trading is also endemic). During the same period, DeFi scams robbed people of more than $10 billion. The crypto industry has seemingly endless cash (some endorsement deals involve crypto or company equity) to splash around on stadium naming rights, commercials with Matt Damon and LeBron James, and tech-industry talent. Mirroring aspects of multi-level marketing, in which participants are compelled to bring in new suckers through the door, crypto is both the preeminent get-rich-quick scheme of our time and mistrusted by many. That dissonance—where potential financial opportunity, however deceptively sold, meets extreme risk—is a hallmark of the golden age of fraud.

A quick look at consumer data and government reports shows that now is a good time to be a scammer. From catfishing—a quarter of all fraud reported to the Federal Trade Commission last year originated on social media—to identity fraud, ransomware, and old-fashioned phone scammers trying to wheedle bank information out of elderly people, there seems to be ever-proliferating varieties of grift and ways for criminals to extract payment. With the pandemic driving people to spend more time (and money) online, crypto wallets and PayPal login credentials have become juicy targets alongside credit cards and social security numbers. “The pandemic has created so many more points of vulnerability,” an insurance company CEO told CNBC last year. While her Forbes article was no great shakes, Heather Morgan clearly understood that circumstances had changed—and might favor criminals like her.

The golden age of fraud has been percolating through the culture for years now. One of the more popular current shows on Netflix is about Anna Delvey, a con artist who defrauded a range of wealthy Manhattanites, along with banks and hotels, and who attracted her own legion of fans after her arrest. In California, Elizabeth Holmes awaits her legal fate for leading the multi-billion-dollar Theranos scam. From WeWork’s reckless spending to the Sackler family’s deadly pushing of opioids, corporate America has decided that the normal rules, and perhaps the law, don’t apply to them. The Republican Party, devoid of ideas beyond angry culture warring, remains in thrall to former President Donald Trump, the country’s most stubbornly successful conman, whose new media company may, for the moment at least, be worth billions despite having almost no assets or income. (Trump’s balky new social network, Truth Social, is merely a rejiggered version of Mastodon, an open-source social media platform.)

In the golden age of fraud, grift sits comfortably alongside the general sense of unreality permeating the American economy. Jpegs sell for millions of dollars and are denominated as a new asset class, despite the many practical and philosophical problems accompanying them. Ephemeral meme stocks and dog-themed crypto tokens outperform deep-pocketed companies that actually, you know, make things. The world’s richest man, Elon Musk, owes his fortune to a state-subsidized electric car company that produces far fewer vehicles than his competitors but is worth more than almost all of them put together. (Although it must be said that Musk’s rivals often aren’t much better: Volkswagen, the number two car company in the world by revenue, cooked the books for years by rigging emission-detection software.)

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