In the midst of international political upheaval, crypto-fundraising initiatives become an escalating issue of regulatory concern
In the rapidly evolving landscape of cryptocurrency, the world of humanitarian fundraising is not immune to the risks of scams. A new report, "The State of Crypto Scams 2025", highlights the challenges and provides red-flag indicators and best practices to counter these risks.
The complexity and sophistication of crypto scams pose significant compliance challenges. Scams now involve AI-powered Ponzi schemes, fake crypto exchanges with mirror domains, synthetic NFTs, regulatory impersonation, and cross-chain token spoofing, making detection more difficult. The use of synthetic tokens and laundering across multiple blockchains complicate forensic tracing and require cross-chain monitoring tools.
Regulatory impersonation and phishing are also common tactics. Fraudsters impersonate regulators like the SEC or FCA, demanding crypto transfers via spoofed emails with false legal threats. This tactic can be devastating in humanitarian fundraising, where donors trust regulatory oversight.
Transaction patterns and the source of funds are other significant red flags. Rapid high-value transfers, withdrawals immediately after receipt, transactions with stolen funds, or activity from jurisdictions with lax AML/CFT enforcement are all indicative of potential scams. Monitoring of sender and recipient profiles is necessary to detect suspicious behavior like frequent changes of IP address, email, or customer information.
The availability of ready-made scam kits lowers the barrier for bad actors, increasing the volume and variety of scams targeting unsuspecting donors. The decentralized, pseudonymous nature of crypto impedes traditional AML/CFT frameworks, necessitating more advanced and crypto-native compliance technologies and methodologies.
To counter these threats, robust verification of fundraising campaigns and wallets is crucial. Third-party audits from reputable firms can verify the smart contracts and wallets associated with fundraising campaigns, ensuring authenticity and security. The use of advanced AI-based fraud detection systems is also essential for monitoring transactions for suspicious patterns, sender/receiver anomalies, and connections to known illicit wallets or jurisdictions.
Cross-chain and forensic analysis tools are necessary for tracing assets across multiple blockchain networks to detect laundering and token spoofing attempts. Donor education and transparency are equally important. Donors should be educated to recognize red flags such as unrealistic guaranteed returns, referral requirements, or requests for obscure tokens like Monero.
Strict AML/KYC procedures on fundraising platforms are also necessary to verify identities and monitor fundflows, reducing the risk of stolen or illicit funds entering the system. Humanitarian organizations should cooperate with regulators and use available scam trackers to report suspicious activities and monitor emerging scams.
Avoidance of unverified third-party promoters is also advised. Beware of trading signal groups or influencers promising high returns or applying pressure tactics, common in scams that trap victims.
In summary, detecting and mitigating crypto scams in humanitarian fundraising requires a combination of advanced technical tools, strict compliance protocols, donor education, and collaboration with trusted entities. The dynamic threat landscape necessitates continuous vigilance and proactive measures to safeguard charitable contributions in the crypto space.
Geopolitical complexities and the exploitation of goodwill by terrorist organizations require compliance teams to be extra vigilant and ensure an effective counter-terrorism financing and sanctions regime. Al-Qaeda has been associated with the use of humanitarian aid charities as a means of funding since the 1990s. A Syrian Facebook fundraiser ostensibly claiming to be an Eid-related humanitarian campaign was found to have sent the vast majority of its proceeds, indirectly, to a wallet associated with al-Qaeda. Crypto has become a lifeline for bypassing repressive restrictions in regions like Myanmar.
The use cases outlined above are considered under the umbrella of donation scams due to the inherent deception involved with facilitating sanctions evasion and terrorist financing through charity fronts. Navigator, a transaction monitoring solution, identifies a "donation" to a fundraiser in Iran with a maximum risk score of "10". These cases underscore the importance of vigilance and collaboration in the fight against crypto scams in humanitarian fundraising.
- In the humanitarian fundraising sector using cryptocurrency, the increasing complexity of scams necessitates the use of advanced AI-based fraud detection systems for monitoring transactions.
- The report "The State of Crypto Scams 2025" highlights the challenges in countering crypto scams, including regulatory impersonation and AI-powered Ponzi schemes.
- The use of blockchain analytics, such as cross-chain and forensic analysis tools, is crucial for detecting laundering and token spoofing attempts, especially in cases involving synthetic tokens and multiple blockchains.
- Humanitarian organizations must collaborate with regulators, use available scam trackers, and implement strict AML/KYC procedures to prevent stolen or illicit funds from entering their systems, as geopolitical complexities can lead to exploitation by terrorist organizations.
