In a November 2022 complaint analysis, the U.S. Consumer Financial Protection Bureau (CFPB) found that fraud, theft, hacking, and love scams are several significant problems in the cryptocurrency market.

According to statistics, between October 2018 and September 2022, the CFPB received more than 8,300 virtual currency complaints, most of which occurred in the past two years. While the industry has been growing steadily since 2020 (leaving aside the cryptocurrency winter), complaints seem to have increased exponentially compared to the previous two years.

The Consumer Financial Protection Bureau (CFPB), established in 2011, is the United States government agency responsible for consumer protection in the financial sector. In the bureau's report, it found that the top issue among all digital asset complaints was "fraud and love scams," accounting for 40 percent of complaints during the four-year period under review. Other complaints included "trading issues" (25 percent) and "inability to provide promised funds at withdrawal" (16 percent).

"The problem appears to be getting worse, as fraud and love scams account for more than half of virtual currency complaints received so far in 2022," the report states. It went on to highlight that "some consumers said they lost hundreds of thousands of dollars due to accessing unauthorized trading platforms."

Approaches are being developed to address some of these issues

The CFPB took direct aim at digital asset platforms and vendors: "The prevalence of fraud complaints raises questions about whether crypto asset platforms are effective in identifying and preventing fraudulent transactions." Despite their security potential, certain digital assets can still fall victim to a range of scams, scams, and hacks, but there are methods under development that could address some of these issues.

In October, the BSV Bitcoin Association launched a software tool called Blacklist Manager that allows miners to freeze digital assets on the BSV blockchain after obtaining a court order or equivalent document.

In June, Tulip Trading Limited (TTL) and the Bitcoin Association settled a landmark lawsuit by Dr. Craig Wright, which claimed that blockchain developers owed fiduciary and tort duties to their users - forcing developers to take action in the event that user tokens were lost or stolen. While the settlement is not an agreement that covers any particular token, it does lay the groundwork for future enforcement of regulations related to lost or stolen tokens.

Before these recovery methods become more sophisticated and widely available, the CFPB summarized its analysis, listing key facts and risks for digital asset consumers to consider:

Digital assets are a common target for hackers.

Important terms and instructions are often hidden in the Terms and Conditions.

Arbitration clauses and class action bans may limit dispute resolution.

The value of digital assets has fluctuated and will likely continue to fluctuate significantly.

- The transaction may not be as private as you think.

- The use of digital assets may violate sanctions.

(Source: FX110)