How would you feel if you were the victim of a white-collar or financial crime?

Most people would panic and look for a solution right away, contacting their bank and the police. Unfortunately, there isn’t always much that you can do after the fact, making prevention incredibly important.

Hackers and scammers keep getting craftier, putting many individuals and businesses at risk. That’s why staying up-to-date with the latest financial crime activities is critical.

At Business2Community, we keep a running list of the most significant financial crimes, to raise awareness and offer tips on how to stay safe.

Top 12 Major White Collar Financial Crime Stories of 2024

    1. Twitter Influencers’ $114 Million Pump-and-Dump Scheme
      Influencers manipulated stock prices through social media for personal gain.
    2. Cargo Theft: $50,000 of Yogurt Stolen
      Organized crime rings target shipments, leading to substantial financial losses.
    3. $25M Ethereum Theft by Two Brothers in Just 12 Seconds
      A high-profile cryptocurrency theft highlights transaction vulnerabilities.
    4. Cypher Protocol Theft: How a Dev Gambled $300k Away: A developer stole $300K from a decentralized exchange reimbursement fund.
    5. FTX Victims’ Fund Recovery: People Won’t Get Full Refund
      Investors face significant financial losses due to the collapse of the cryptocurrency exchange.
    6. 6. Biden Flags Chinese Crypto Miner as National Security Risk: A Chinese crypto firm was expelled due to national security concerns.
    7. GameStop Stock Surge: Was It Actual Market Manipulation? Market manipulation questions transparency and fairness in stock trading and the involvement of big money companies.
    8. Nikola Motors Scandal: Fraud and Financial Struggles: The trucking company struggles with significant losses and declining stock value despite increased revenue claims.
    9. Indodax Hack: A $22 million hack on Indonesian crypto exchange Indodax highlights the growing risks for digital asset platforms, with suspected ties to the North Korean Lazarus Group.
    10. Wohl and Burkman AI Lobbying Firm: Convicted fraudsters Jacob Wohl and Jack Burkman launched an AI-driven lobbying firm, raising concerns over transparency and fraud in the emerging AI sector.
    11. WazirX Hack: WazirX canceled all open orders as part of its post-recovery plan following a $230 million hack that impacted 6.8 million user.
    12. Pig Butchering Scams: Sophisticated fraud schemes known as pig butchering have stolen over $75 billion from cryptocurrency investors globally, exploiting trust and high-pressure tactics.

1. Twitter Influencers’ $114 Million Pump-and-Dump Scheme

Eight Twitter influencers were charged in a $100 million criminal pump-and-dump scheme.

Edward Constantinescu (@MrZackMorris) & his accomplices are accused of orchestrating a pump-and-dump scheme, misleading over 1.5 million followers and generating $114 million in illicit profits.

@MrZackMorris
Edward Constantinescu

They used social media platforms like Twitter and Discord to inflate penny stock prices, then sold their shares at a profit, leaving their followers with losses.

Impact and Importance

This scheme highlights the significant influence of social media on investment decisions and underscores the dangers of market manipulation. Unfortunately, these kinds of scams are extremely common on social media platforms like X.

The legal consequences for the accused are severe, with potential sentences starting at 25 years in prison.

This case underscores the need for stricter regulations and oversight in the financial markets to protect investors from fraudulent activities.

How to Stay Safe

  • Always conduct independent research before making investment decisions.
  • Be cautious of stock tips and advice from social media influencers.
  • Diversify your investments to mitigate risk.
  • Use trusted and regulated investment platforms.
  • Report suspicious activities to regulatory authorities.

3. Cargo Theft: $130 Million in 2023

Cargo theft surged to nearly $130 million in 2023, with organized crime rings targeting high-value shipments across states like California, Texas, and Florida.

Remote theft methods have facilitated these crimes, making it extremely important to ensure that all internal applications and platforms are secure.

Impact and Importance

The financial implications extend far beyond the value of the stolen goods.

These thefts disrupt supply chains, increase operational costs, and pose significant security challenges for the logistics industry. As cargo theft becomes more sophisticated, the need for robust security measures has never been greater.

How to Stay Safe

To combat strategic cargo theft, companies should:

  • Only Use Secure Messaging and Logistics Platforms: Always make sure that hackers and outsiders can’t access or interrupt your internal apps.
  • Invest in Advanced Tracking Technologies: Use GPS and tamper-proof smart seals for real-time monitoring.
  • Enhance Security Protocols: Implement thorough identity verification and rigorous screening processes for all logistics partners.
  • Collaborate with Law Enforcement: Work closely with authorities to track and recover stolen goods.
  • Use Secure Transportation Routes: Plan and use safer, less predictable routes for shipping.

3. $25M Ethereum Theft by Two Brothers in 12 Seconds

In a high-profile case, two brothers stole $25 million in Ethereum within 12 seconds.

Federal prosecutors have charged 24-year-old Anton Peraire-Bueno and 28-year-old James Peraire-Bueno with fraud and money laundering.

They used their expertise in mathematics and computer programming to exploit vulnerabilities in the Ethereum blockchain’s transaction validation process.

Impact and Importance

This case marks the first-ever prosecution involving the manipulation of blockchain transaction validation processes.

The Peraire-Bueno brothers’ actions call into question the integrity of pioneering blockchain technology, which is supposed to be secure and immutable.

Such breaches can severely undermine trust in the blockchain and cryptocurrency ecosystem.

How to Stay Safe

  • Enhanced Security Protocols: Regularly update and enhance blockchain protocols to prevent exploitation of vulnerabilities.
  • Transaction Monitoring: Implement advanced monitoring systems to detect and prevent unusual transaction patterns.
  • Vetting Validators: Thoroughly vet and monitor entities responsible for validating transactions on the blockchain.
  • Legal Frameworks: Strengthen legal frameworks to prosecute and deter cybercriminals effectively.

4. Cypher Protocol Dev Theft: Embezzling & Gambling $300k of the Reimbursement Fund

Imagine waking up one day and discovering $300k missing from your company’s reimbursement fund.

That’s exactly what happened at Cypher Protocol, a Solana-based decentralized exchange, when a core developer, known as “Hoak,” stole and gambled away these funds.

This theft underscores the critical importance of thorough vetting and stringent security measures in decentralized finance (DeFi) platforms.

DeFi platforms operate on blockchain technology, which can be vulnerable to exploitation if not properly secured.

Hoak’s actions have highlighted these vulnerabilities, shaking trust in the DeFi ecosystem.

Impact and Importance

Trust in DeFi relies heavily on the security measures enforced by developers and platform operators.

Incidents like this can erode investor confidence, potentially hindering the growth and adoption of DeFi solutions.

For Cypher Protocol, this theft is a massive setback, especially as it was already recovering from a previous $1 million cryptocurrency theft. It will be incredibly difficult to rebuild trust with users after both of these devastating events.

How to Stay Safe:

  • Audited Smart Contracts: Ensure that all smart contracts undergo rigorous security audits.
  • Multi-Signature Wallets: Implement multi-signature wallets to require multiple approvals for large transactions.
  • Transparency: Maintain a high level of transparency with users regarding security protocols and fund management.
  • Regular Updates: Continuously monitor and update security measures to protect against new threats.
  • Vetting Procedures: Thoroughly vet all developers and contributors to minimize insider threats.

5. FTX Victims’ Fund Recovery: People Won’t Get Full Refund

Despite reports, FTX victims won’t fully recover their funds.

In a historic and unprecedented outcome, nearly all creditors of the failed cryptocurrency exchange FTX will technically recover 100% of the funds they had on the platform before its shocking collapse in November 2022.

But there’s a huge catch.

Victims who were holding cryptocurrencies on the platform will not be paid back in crypto. They will be paid in USD based on the value of the coins around the time of the collapse, which is much less than they are worth today (mostly thanks to the FTX crash).

Impact and Importance

The appointed administrators of FTX during the bankruptcy proceeding revealed a plan to raise between $14.5 and $16.3 billion from selling various assets owned by the failed crypto exchange.

These figures exceed the $11.2 billion worth of claims that they have received from FTX´s customers.

This recovery plan stands as a rare and exceptional result in bankruptcy law, contrasting sharply with high-profile bankruptcies like Enron and Lehman Brothers, where creditors often recovered just pennies on the dollar.

How to Stay Safe

  • Diversify Holdings: Avoid keeping all funds on a single exchange. Most experts recommend self-custody and diversification across multiple platforms and types of assets.
  • Due Diligence: Regularly review the financial health and security measures of the exchanges used.
  • Stay Informed: Keep up-to-date with news and developments in the cryptocurrency space to anticipate potential risks.
  • Cold Storage: Use trusted hardware wallets or other cold storage solutions for long-term holdings to mitigate the risk of exchange failures.

6. Biden Flags Chinese Crypto Miner as National Security Risk

The use of the term “national security risk” has been rising in US-China relations, with President Joe Biden recently flagging MineOne, a Chinese-backed cryptocurrency mining firm, as a threat.

Biden barred the firm from owning land near a Wyoming nuclear missile base, citing credible evidence that MineOne might impair US national security.

The order gives MineOne Partners Ltd. 120 days to divest the property and 90 days to cease operations and remove equipment.

Impact and Importance

This move highlights the growing concerns over foreign investments in sensitive areas, particularly near strategic military installations. The proximity of MineOne’s operations to the Francis E. Warren Air Force Base raised alarms about potential surveillance activities.

The decision underscores the importance of safeguarding national security against foreign entities that may pose espionage risks.

The increasing scrutiny on Chinese-owned businesses in the US reflects broader geopolitical tensions and the need for vigilance in protecting critical infrastructure.

How to Stay Safe

  • Thorough Vetting: Ensure comprehensive background checks and vetting processes for foreign investments, especially those near sensitive locations.
  • Enhanced Monitoring: Implement robust surveillance and monitoring systems to detect and deter unauthorized activities.
  • Regulatory Compliance: Adhere strictly to regulatory guidelines and cooperate with national security agencies to mitigate risks.
  • Public Awareness: Increase public awareness about the potential risks associated with foreign investments in critical areas to foster community vigilance.

7. GameStop Stock Surge: Was It Actual Market Manipulation?

Just when meme stock mania seemed to be behind us, a cryptic tweet from “Roaring Kitty” (Keith Gill) triggered a massive rally in meme stocks, especially GameStop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC).

roaring kitty tweet

While some traders profited, many more suffered losses as the stocks crashed from their peaks.

Experts suggest that suspicious options trades before the rally indicate that the GME pump might have been engineered by big money.

Impact and Importance

The sudden surge in GME’s stock price, fueled by a tweet, raises concerns about market manipulation. The rally drew parallels with previous pump-and-dump schemes where a few profited at the expense of many.

The massive open interest build-up in deep out-of-the-money call options on GME before the tweet hints at possible insider activity.

Such schemes can undermine investor confidence and highlight the risks of speculative trading based on social media hype.

How to Stay Safe

  • Due Diligence: Always research thoroughly before investing in stocks, especially those subject to social media hype.
  • Avoid Speculative Trades: Be very cautious with options trading, particularly deep out-of-the-money options, unless you fully understand the risks.
  • Diversify Investments: Most experts suggest diversifying funds across multiple stocks or sectors to avoid devastating losses.
  • Regulatory Awareness: Stay informed about market regulations and ensure your investments comply with them to avoid falling victim to pump-and-dump schemes.

8. Nikola Motors Scandal: Fraud and Financial Struggles

Nikola Motors, the EV maker, has suffered through multiple major scandals and accusations in recent years with its ex-CEO, Trevor Milton, convicted of fraud.

Despite the company’s claims of a “very solid” quarter in Q1 2023, underlying financial woes and production halts paint a bleak picture.

Impact and Importance

The ongoing struggles, controversies, and legal issues have severely damaged Nikola’s reputation and financial stability. The company’s stock has plummeted, and its production and sales figures are dismal.

This situation underscores the risks of investing in companies with unproven technology and controversial leadership.

How to Stay Safe

  • Conduct thorough research before investing in new or controversial companies.
  • Be wary of companies with a history of legal issues or misleading claims.
  • Diversify your investment portfolio to mitigate risk.
  • Stay informed about the latest news and reports from credible sources.
  • Consider consulting with a financial advisor before making significant investment decisions.

9. $22 Million Hack on Indonesian Crypto Exchange Indodax

In a major cyberattack, Indonesian crypto exchange Indodax lost $22 million due to a sophisticated hack.

The attackers targeted Indodax’s hot wallets, exploiting vulnerabilities in its security system, and extracted various cryptocurrencies, including over 5,000 Ethereum (ETH) and 25 Bitcoin (BTC). The attack affected 6.8 million users, causing the platform to temporarily halt operations.

Impact and Importance

This breach highlights the vulnerabilities in digital asset exchanges, particularly hot wallets that handle real-time transactions.

The suspected involvement of sophisticated hacking groups like the Lazarus Group, often associated with North Korea, has raised alarms about the growing international risks in the crypto sector.

How to Stay Safe

  • Regularly update security systems and conduct audits.
  • Use cold storage solutions for long-term crypto holdings.
  • Enable multi-factor authentication on all accounts.
  • Monitor exchanges for any unusual activities and withdraw funds during suspicious events.

10. Jacob Wohl and Jack Burkman’s AI Lobbying Firm

Despite their previous conviction for telecommunications fraud, Jacob Wohl and Jack Burkman have launched a new venture called LobbyMatic, an AI-driven lobbying firm.

The firm promises to provide clients with advanced AI tools to track congressional activity, but former employees revealed that the company is run under aliases and may be yet another fraudulent scheme.

Impact and Importance

This case underscores the persistent threat of fraud even in emerging industries like AI.

Wohl and Burkman’s involvement raises questions about transparency and legitimacy in corporate lobbying, particularly with companies like Toyota and Lantheus testing the firm’s services under free trials.

How to Stay Safe

  • Vet firms and their leadership carefully before entering partnerships.
  • Stay informed about the ethical implications of AI in business.
  • Report suspicious lobbying activities to authorities to ensure transparency​

11. WazirX Attempts Post-Hack Recovery

After a massive $230 million hack in July 2024, Indian crypto exchange WazirX recently canceled all open orders on its platform.

This decision is part of the company’s ongoing recovery efforts, aimed at addressing issues with user balances and restoring confidence in the platform.

Impact and Importance

The cancellation of open orders is a key step in WazirX’s recovery process, helping the exchange protect its users’ funds and stabilize operations.

However, users remain anxious due to unresolved compensation issues.

How to Stay Safe

  • Regularly monitor exchange security updates and account balances.
  • Avoid keeping large amounts of crypto on exchanges; use cold wallets for storage.
  • Report any suspicious activity to the exchange immediately​.

12. The Rise of Pig Butchering Scams in Cryptocurrency

A new type of sophisticated fraud known as “pig butchering” has siphoned over $75 billion from unsuspecting cryptocurrency investors since 2020.

These scams typically involve building trust with victims through long-term interactions before persuading them to invest in fake crypto schemes. Once funds are transferred, the scammers vanish, leaving victims with devastating financial losses.

Impact and Importance

The scale of pig butchering scams highlights the growing risks for crypto investors and underscores the need for increased vigilance and regulatory oversight in the digital asset space.

These scams have severe emotional and financial consequences for victims.

How to Stay Safe

  • Be wary of unsolicited messages and offers, especially involving crypto investments.
  • Consult with trusted financial advisors before making large investments.
  • Avoid any investment that promises guaranteed returns, especially with high pressure to act quickly

8 Current Threats in Economic Crime To Avoid at All Costs

Here are the main threats that you need to look out for based on the methodology of the Europol and other international agencies:

  1. Investment Fraud: Includes boiler room schemes, Ponzi schemes, and pyramid schemes.
  2. Mass Marketing Fraud: Utilizes various means of communication to solicit money or valuables.
  3. Payment Order Fraud: Involves fraudulent transfer orders affecting international organizations.
  4. Insurance Fraud: Targets healthcare systems and insurance providers.
  5. Benefit Fraud: Linked to human trafficking and migrant smuggling.
  6. EU Subsidy Fraud: Involves fraudulent applications for EU grants.
  7. Procurement Rigging: Criminals influence public tender evaluations through bribery.
  8. Loan and Mortgage Fraud: Uses fraudulent documents to obtain loans never repaid.

Business2Community’s 10 Tips for Staying Safe from Financial Crimes

  1. Stay Informed: Regularly update yourself on the latest financial crime trends and cybersecurity threats.
  2. Use Strong Passwords: Create complex passwords and change them regularly. Use a password manager if necessary.
  3. Enable Two-Factor Authentication: Add an extra layer of security to your accounts.
  4. Verify Sources: Always confirm the legitimacy of emails, phone calls, and websites before sharing personal information. Most companies won’t call or email you for your passwords or personal information.
  5. Secure Your Devices: Use trusted antivirus software and keep your operating system and applications up to date.
  6. Monitor Accounts: Regularly check your bank and investment accounts for any unauthorized transactions.
  7. Educate Yourself: Take courses or read up on basic cybersecurity practices and financial fraud prevention.
  8. Be Skeptical: If an offer sounds too good to be true, it probably is. Always double-check before making any financial commitments.
  9. Use Secure Networks: Avoid conducting financial transactions over public Wi-Fi. Use a VPN if necessary.
  10. Report Suspicious Activity: Immediately report any suspected financial crime to the relevant authorities.

Wrapping Up: Stay Safe from White Collar Crime

Staying safe from financial crimes requires vigilance, education, and proactive measures.

After reading through our round-up, you can already imagine the risks of not regularly updating security protocols, knowing the latest threats, and diversifying investments to minimize risks.

TLDR: Always verify the legitimacy of platforms and individuals you transact with and keep an open mind when implementing the prevention methods you’ve just learned.