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• Crypto investment relates to higher likelihood of fraud victimization. • General exposure to financial education correlates with increased fraud vulnerability. • Objective financial knowledge is associated with lower likelihood of fraud victimization. • There is no significant association between subjective financial knowledge and fraud victimization. Conventional wisdom treats cryptocurrency mainly as a payment rail for illicit finance. Using newly released 2024 NFCS data (n = 16,296), we examine whether crypto ownership elevates fraud risk. Through empirical analysis, we find that crypto investors are twice as likely to report being targeted by scams and to incur financial losses from fraud, relative to non-crypto investors. These findings shift the narrative from viewing cryptocurrency as a neutral channel for financial transactions to recognizing it as a risk amplifier that significantly increases the likelihood of fraud victimization. Our findings inform investor protection and regulatory design in digital asset markets.
Bai et al. (Wed,) studied this question.