What is Cryptocurrency?

Cryptocurrency is a form of digital or virtual currency that uses cryptography for security. Unlike traditional currencies issued by governments (such as the U.S. dollar or the euro), cryptocurrencies operate on decentralized networks based on blockchain technology—a distributed ledger that records all transactions across a network of computers. Cryptocurrencies are designed to enable secure, peer-to-peer transactions without the need for a central authority, like a bank or government. Their value is not backed by any physical commodity or government decree but is determined solely by market demand and supply.

Common examples of cryptocurrencies include:

• Bitcoin (BTC)
• Ethereum (ETH)
• Tether (USDT)
• USD Coin (USDC)
• Ripple (XRP)
• Cardano (ADA)
• Solana (SOL)
• Binance Coin (BNB)

Wallet Address vs. Transaction ID/Hash

Wallet Address:

A wallet address functions like your account number for receiving cryptocurrency. It is a unique identifier tied to a specific wallet, and its format and length vary by blockchain. For example:

• Bitcoin addresses range from 26 to 63 characters and may start with "1," "3," or "bc1."
• Ethereum addresses are always 42 characters long, beginning with "0x."

Transaction ID/Hash:

A transaction hash (or ID) acts like a receipt for a specific transfer of funds. It is a fixed-length cryptographic fingerprint of the transaction details, used to track and verify payments on the blockchain. For example:

• Bitcoin transaction hashes are 64-character hexadecimal strings.
• Ethereum transaction hashes are also 64 characters long (including the "0x" prefix).

Key Difference:

A wallet address is for receiving funds, while a transaction hash is proof of a completed transfer. Addresses vary in length and format across blockchains, but transaction hashes are consistently long, fixed-length strings.


Why Do Criminals Use Cryptocurrency?

Criminals are increasingly exploiting cryptocurrencies for illicit activities such as fraud, money laundering, and ransomware attacks due to the following features:

1. Decentralization and Anonymity: Cryptocurrencies operate on decentralized networks, allowing users to transfer funds globally without relying on traditional financial intermediaries. While transactions are recorded on a public ledger, the identities of users are often pseudonymous, making it easier for criminals to conceal their activities.
2. Irreversible and Rapid Transactions: Cryptocurrency transactions are typically irreversible and can be completed within minutes, regardless of geographic borders. This allows criminals to quickly move funds without the oversight of anti-money laundering (AML) protocols used by banks.
3. Global Accessibility: Criminals can transfer cryptocurrencies from anywhere with an internet connection, often targeting jurisdictions with weak regulatory frameworks to evade law enforcement.
4. Challenges for Law Enforcement: While blockchain technology provides transparency by recording all transactions, tracing funds across international borders remains complex. Criminals exploit exchanges in jurisdictions with lax regulations to obscure the trail of illicit funds.

What to Do If You Are a Victim of a Cryptocurrency Scam

If you believe you have been targeted or fallen victim to a cryptocurrency scam, take the following steps:

Report the Incident
Submit a detailed report to European Crypto Fraud Intelligence Unit. Provide as much information as possible, including:

• Cryptocurrency addresses involved
• Transaction hashes and amounts
• Dates and times of transactions
• Communication details (e.g., emails, social media profiles, phone numbers)
• Domain names or platforms used by the scammer

Secure Your Accounts

Immediately change passwords and enable two-factor authentication on any compromised accounts. Notify your financial institution if traditional payment methods were involved.


Avoid Recovery Scams

Be cautious of recovery agencies. These are often additional scams targeting vulnerable victims. Only licensed lawyers or authorities such as ECFIU can provide you with a legal assistance in such cases.

Educate Yourself

Learn to recognize common red flags, such as promises of guaranteed returns or "too good to be true" promises.

How to Protect Yourself

• Verify Before Trusting: Always confirm the legitimacy of offers or requests involving cryptocurrency, especially if they originate from unknown sources. But keep in mind that authorities or regulated financial institutions, such as banks or crypto exchanges, can demand from you an additional financial activity based on a percentage of the refunded amount. The amount and percentage of such requests may vary depending on the jurisdiction.
• Use Secure Wallets: Store cryptocurrencies in reputable, secure wallets, banks or crypto exchanges and avoid sharing private keys or recovery phrases.
• Stay Informed: Keep up-to-date with common scam tactics and regulatory developments in the cryptocurrency space.

By understanding the risks and taking proactive measures, individuals and organizations can better protect themselves against the growing threat of cryptocurrency-related fraud.


If you are a victim of an cryptocurrency fraud, you should immediately report the incident to ECFIU.