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Analysis:
Analysis

If a digital asset isn’t secure, it’s not an asset

Digital assets manipulation and surveillance trends

Digital assets like blockchain and cryptocurrency are transforming traditional financial systems. As the sector evolves, regulators are paying close attention to ensure market integrity and transparency. In our latest white paper, we explore emerging trends in digital assets manipulation and the evolving regulatory framework designed to counter it.

Emerging trends in digital assets manipulation and surveillance
3 MB PDF

The latest schemes and how to thwart them

While existing digital assets manipulation tactics such as wash trading, insider trading, and pump-and-dump schemes continue to remain prevalent, devious strategies such as oracle price manipulation, pig butchering, and scams aimed at defrauding investors, are also on the rise.

This is a specific type of vulnerability in which an attacker exploits the reliance of smart contracts on external data sources, called oracles, to tamper with contract execution or access information without authorization. For example: By leveraging unrealized profits and the inflated value of their holdings as collateral, an attacker can use digital assets to successfully secure a substantial loan, often in hundreds of millions of dollars.

Named after the practice of fattening a pig before slaughter, pig butchering is a scheme where con artists gain the trust of their targets, coax them into making fraudulent investments, then vanish with their funds. The process typically starts with the scammer asking for small investments in order to gain the target’s confidence. Then they use false claims and doctored performance data to give the impression of considerable asset growth, resulting in the victim incurring substantial losses, thus “butchering” their investments.

These are fraudulent investment tactics that rely on the constant inflow of new investors or investments to provide returns for previous participants. They begin with a bad actor who tempts investors with the promise of sizable returns. Then, the scammer uses the funds provided by new investors to pay off returns owed by earlier participants, thus establishing a vicious cycle. When it becomes impossible for the victims to recruit sufficient new participants or investments to maintain payouts, the scheme collapses, leading to significant financial losses for those involved.

Digital assets surveillance tools

Trade surveillance monitoring is crucial for maintaining market integrity. Deloitte provides tools specifically designed for digital asset markets that use advanced data analytics, algorithms, blockchain forensics, and artificial intelligence to track transactions and identify suspicious activities, all while ensuring regulatory compliance.
 Key benefits of these tools include:

  • Real-time, 24/7 transaction monitoring.
  • Integrated control frameworks with data quality reporting, audit, and case management.
  • Monitoring of currency pairs trading and fractional volumes trading.
  • Access to past market data, including full-depth order book visual replay and reconstruction.
  • Ability to analyze trade data from multiple exchanges, examining multiple coins and tokens over time.

To learn more about emerging trends in digital assets manipulation and how Deloitte can help you combat them, download our latest white paper or connect with one of our experienced Blockchain & Digital Assets leaders.

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Roy Ben Hur

Roy Ben Hur

Managing Director | Deloitte & Touche LLP
+1 973 602 4233