What’s driving the continued expansion of cybercrime and digital fraud?

Cybercrime is something we can expect to see more of in 2022, the pandemic having accelerated a trend that was already growing rapidly as we conduct more of our day-to-day activities online. While technology continues to advance, criminals similarly are becoming more sophisticated and the constant flow of online traffic presents copious opportunities for digital fraud. For example, widespread use of social media channels provides fraudsters with additional platforms from which to promote and execute phishing scams and fake investment schemes, using misleading associations with reputable brands and purported endorsements by influencers who may or may not be in on the scam.

The popularity of largely unregulated cryptoassets among individual investors provides further opportunities for digital exploitation. In addition to the scams described above, crypto related frauds to date have featured fake coins, NFTs and initial coin offerings, as well as the theft of passwords and private keys associated with cryptocurrency wallets via spoofing and phishing attacks. Centralised crypto exchanges are an obvious target for hackers, with significant cyberattacks now occurring frequently. We will see more of these activities as the crypto market continues to expand and innovate.

Just as banks can face liability to their customers over fraudulent transactions, we may ultimately see crypto exchanges being held to account by wallet holders whose crypto assets are lost to fraud. While the relative anonymity with which crypto assets can be transferred inevitably attracts a small portion of users involved in illicit activities, the digital ledger often enables transactions to be traced, and court orders can be obtained against exchanges requiring them to disclose information that may help to identify the fraudsters. The English courts have demonstrated their willingness to make disclosure orders and asset preservation orders available to victims of crypto fraud and we are likely to see them increasingly called upon to do so.

Next, We’ll look at the challenges and opportunities created by Brexit when it comes to issues concerning jurisdiction and enforcement.