Cryptocurrency risks, fraud cases, and financial performance




Kerr, David
Loveland, Karen
Smith, Katherine
Smith, Lawrence Murphy

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In this study, we examine major cryptocurrencies, present notable fraud cases, describe fraud risks, and analyze cryptocurrency financial performance. People debate whether cryptocurrency is an investment opportunity, the new Dutch Tulip Bubble, or a giant Ponzi scheme. There have been a number of high-profile fraud cases associated with cryptocurrencies, such as the FTX scandal in late 2022, thereby making fraud a real concern to current and potential future investors. Regarding financial performance, cryptocurrencies experienced a major collapse in value in the most recent period of the study, about three times worse than the major stock market indices. While in prior periods, cryptocurrencies have significantly outperformed stock market indices, recent fraud cases and the extreme volatility of cryptocurrencies indicate that investing in cryptocurrencies comes with much higher risk than traditional stock market investments. The debate over the investment potential of cryptocurrencies continues, whether they have long term value or are simply the new Dutch Tulip Bubble. The study’s findings will be useful to investors, regulators, and academic researchers regarding the cryptocurrency industry.



cryptocurrency, Bitcoin, fraud risk, financial investment, Ponzi scheme



Attribution 4.0 International


Kerr, David S., Karen A. Loveland, Katherine Taken Smith, and Lawrence Murphy Smith. 2023. Cryptocurrency Risks, Fraud Cases, and Financial Performance. Risks 11: 51. risks11030051