Financial crime is under-reported, so it is difficult to put exact numbers to the size of the problem, but a wide comparison is better than none. Bitcoin is undoubtedly a Pyramid scheme and as such, Bitcoin is financial crime.
Pyramid schemes are illegal under the Fair Trading Act "whether or not they provide a product or service, or both" and if you ask me, there is nothing special about Bitcoin/crypto which exempts it from this. As fruitless as reporting such crime may seem, offers for the sale and/or purchase of Bitcoin or "crypto" should be reported to Police, even if for no other reason than statistics.
Similarly, Bitcoin mining is reportable to the Department of Internal Affairs (DIA) due to being an illicit lottery, falling under gambling regulations, but finding anyone at the DIA willing to act on such reports went nowhere in my experience. The Financial Markets Authority (FMA) have also failed to act on my reports.
Tax evasion, one of the primary uses touted for Bitcoin, costs the NZ economy NZD$7 to $8 billion dollars per anum. For comparison benefit or welfare fraud cost the economy NZD$2.4 million in 2023, while $49 million was spent Policing it, according to Victoria (now Wellington) University research. It is controverial to me, that this is more than the FMA and Serious Fraud Office receive, combined.
Benefit fraud is also on the decline, with successful prosecutions dropping year-on-year despite the zealous addition of resources countering it. A fair and accessable social welfare system is something generally agreed upon across the political divide, but the disproportionate resourcing thrown at it is likely more about satiating voters deceived by 'lazy beneficiary' stereotypes, as part of populist political campaigns from the far-right in NZ, than policy grounded in data and reality. Either way, this proves we can combat fraud where there is a political will to do so.
Meanwhile, crypto fraud is being led by Bitcoin's growth and absolutely not on the decline. So if we can successfully tackle welfare fraud, why can we not Police crypto fraud with the same zeal? This is a larger problem than benefit fraud ever was, but does not get the same recognition. Talk-back radio remains a cesspit of toxic attitudes towards the impoverished, and the Group Think that foments paves the highway to hell: creating folk devils out of the impoverished while unrepentent, convicted fraudsters like Damien Grant are given platforms to brag about their exploits. Reading between the lines of his articles, the tax collectors all deserved it, right?
It is unfortunate to say, I can not imagine any Kiwi radio host interviewing dissenters of crypto. Crypto critics are the outspoken minority up against a well-funded and well-voiced industry lobby, outspending even AIPAC by three times or more in the most recent US election. The same is true in New Zealand, and crypto was bought into the fold without any Act of Parliament by Labour. I do not think any political party has identified the scale of this problem, or has policy to address it. How do you nail jelly to a wall anyway?
I use the jelly analogy because Bitcoin is many things, one of which is a basic cult, because after the "crypto" deception takes hold the actual cryptography stops mattering. Bitcoin invented nothing in this field of mathematics and science, but it is widely called an invention, despite there being no truth to that claim. Burglars didn't invent the crowbar either, but they know well how to misuse everything in the tool store. Participants in crypto scams range from the deceived to the deceivers themselves, point being without deception Bitcoin cannot operate. Fake Internet money based on highly unique numbers has even less value than the supposedly-fake fiat currency often maligned by "crypto" proponents.
The ACT political party has apparently not considered data on the subject of fraud before announcing policy in the area last election, to focus on welfare fraud more than the (significantly) larger problem of white collar crime. This is a political problem and no amount of political twist changes that. Without leadership on the issue there is a vacuum being filled by fraudsters who embelish obvious Pyramid scams with legitimate-sounding weasel-words like "regulatory escape velocity", said as if the laws, rules and regulations given democratic assent to protect consumers from becoming victims, are some kind of problem to be surmounted.
There is a concerning political proximity with everything "crypto" and illiberal or anti-democratic forces. Supporters of "crypto" can likely be found in every political party, I have noticed leftists join hands with their contemporary enemies on the far-right on the issue. Some critics disingenuously frame it as an exclusively left vs right issue despite the evident Horseshoe theory in action on the matter, the unifying issue there appears to be simplistic disdain for the USA.
Another common yet flawed criticism comes in the form of framing it as a tool of US hegemony, despite strong suspicions "Satoshi" was some Russian operator who spoke UK English and not the US dialect. "Satoshi" had no apparent US footprint other than a burner gmx email address, temporal analysis would likely also locate him in the UK, and the cryptographic indications are it is a straight attack on NIST/NSA standards, specifically intent on weakening the SHA digest by creating a semi-free start corpus that would otherwise be impossible to create. With a cheeky layer of EU (RIPE) MD thrown in for good measure, as if creating a digital pinata is good for all these BLUFOR security standards.
A preimage attack normally has time complexity of 2**(n/2) and "mining" moves the goalposts even closer. To me, conducting attacks on SHA-2 often seems like it's main basis for existence and the whole casino is just a patsy for that. Why not 'mine' Streeborg, huh? If nothing else, the timing is suspicious as Streeborg was in draft when Bitcoin came on the scene. There is more to say about why the weight of evidence points to "Satoshi" being Russian, such as the genesis block quoting the UK Times, why not the New York Times with 10x the readership?
There is a bit of relevant context to that choice of newspaper beyond the scope of this article, such as how the UK Times has long been critical of Russia, critical of Putin, it's condemnation of the Russian invasion of Ukraine and how it still draws animosity from Putin's sympathisers to this day.
Back here in New Zealand, even the NZ Green party are dangling the traditionally right-wing, libertarian carrot of supporting encryption for encryption's sake, which is a central theme in the "crypto" doctrine. On this matter the political antipodes of ACT and The Green Party curiously agree. It is worth repeating the crypto-cult icon and Ethereum creator Vitalik Buterin accepted an invitation from Putin to an economics conference in St Petersberg, after the annexation of Crimea, although has since distanced himself from that, for whatever little that is worth.
How anyone gets the idea Bitcoin is some American plot beggars belief, it is closer to a modern Operation Andre: an attempt to destabilize western economies that worked, somewhat, but also backfired. Another relevant yet often overlooked thing worth repeating, is the infamous Charles Ponzi also worked for Mussolini.
In conclusion, some good news is also worth mentioning, scams in general are being taken more seriously in popular media now. However, and with the caveat of indulgence in stereotyping myself, the old saying 'walks like a duck, talks like a duck, it is probably a duck' is completely forgotten when it comes to identifying Bitcoin and crypto as obvious examples of scams. This continuing reluctance to simply state 'Bitcoin is fraud' comes at a cost, one we are unlikely to fully realise until it is too late. It is still a long way down for market operators playing pass-the-parcel with these bad bags.
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