Political figures like Donald Trump promoting memecoins, lenient regulations, and cryptocurrency court cases dismissed by US authorities have ignited a crypto “crime supercycle”, according to two blockchain crime researchers.
ZachXBT, a blockchain investigator, shared his observations on X last Thursday, noting that the potential for misuse in the crypto world has always been significant. However, the situation has “markedly escalated since politicians introduced memecoins and multiple court cases were dismissed, further encouraging such misconduct.”
He stated that for defrauding their followers, crypto influencers and key thought leaders face “absolutely no consequences.” ZachXBT continued, “In the current favorable environment, it has never been a worse time to engage in black hat, phishing, social engineering, and robbery activities as compared to gray hat activities.”
Slow regulatory advances are also part of the problem. The lack of enforcement on projects that fail to disclose paid advertisements and similar behavior has also fed into the supercycle, says ZachXBT.
He argued that if regulators had focused on managing this sector instead of pursuing open-source developers or blue-chip decentralized protocols, the current situation wouldn’t be so prevalent. The lack of repercussions has allowed these practices to flourish.
According to a report shared with Cointelegraph by cybersecurity firm Hacken, over $2 billion was lost to crypto hacks in the first quarter of 2025. Phishing scams accounted for $96 million of this, while rug pulls were responsible for more than $300 million.
Taylor Monahan, another blockchain detective, joined the conversation, stating that as long as scammers are making significant profits, their behavior is unlikely to change. She believes that the crypto industry is in a “difficult place” as it continues to attract and retain too many hackers and scammers.
She noted, “There are no social, financial, or legal obstacles or friction to this kind of behavior. Plus, it’s simply so easy and there’s so much instant money to be made.”
While some scammers are facing legal consequences, many continue to operate freely. The US Department of Justice recently announced the seizure of more than $225 million linked to crypto investment scams by the Secret Service. Moreover, a New Zealand man was arrested in May for his alleged involvement in a global crypto fraud operation that reportedly stole 450 million New Zealand dollars ($265 million).
