Are You Evolving With the Evolution of Fraud?

Andrea Wright, CPA Partner, Johnson Lambert LLP
Trends in Accounting, Auditing, and Consulting

Fraud will always be a persistent challenge in the financial world. With rapid advancements in technology, fraudsters now, and will foreseeably, have an arsenal of sophisticated tools to outpace regulators and investors.

Looking at some of the most notorious fraud cases from the past decade, it becomes evident that deception today is more complex, global, and difficult to detect than ever before. The collapse of FTX in 2022, for example, underscored the risks of unregulated cryptocurrency markets. Founded by Sam Bankman-Fried, FTX was once one of the largest cryptocurrency exchanges before revelations of misappropriated customer funds led to a catastrophic loss of billions. Similarly, the 2020 Wirecard scandal in Germany exposed major gaps in financial oversight when it was discovered that the fintech company had fabricated earnings, claiming to hold over €1.9 billion that never existed.

The fraud surrounding Theranos, led by Elizabeth Holmes between 2015-2018, further demonstrated how hype in the tech sector can mask fraudulent activities. Holmes claimed that Theranos had developed revolutionary blood-testing technology, only for investigators to uncover that the company had falsified test results, deceiving investors and patients alike. Meanwhile, the 1Malaysia Development Berhad scandal, which surfaced in 2015, revealed large-scale corruption and money laundering within Malaysia’s sovereign wealth fund, implicating high-profile individuals, including the country’s former prime minister.

Additionally, cases such as the Wells Fargo fake accounts scandal in 2016 and the collapse of Archegos Capital Management in 2021 illustrated how excessive risk-taking and unethical corporate cultures continue to play a role in modern financial fraud. Wells Fargo employees, under immense pressure to meet unrealistic sales targets, created millions of unauthorized accounts, while Archegos’ misuse of leverage led to disastrous losses for major banks.

When comparing these recent scandals to the frauds that shook the early 21st century, clear similarities emerge. Fraudsters across both periods exploited regulatory weaknesses, manipulated financial data, and capitalized on investor trust. For example, the early 2000s saw some of the most infamous cases in financial history, including Enron’s massive accounting fraud, WorldCom’s revenue inflation scandal, and Bernie Madoff’s record-breaking Ponzi scheme that defrauded investors of $65 billion. Each of these cases illustrates how deception thrives when oversight is weak and greed overshadows integrity.

WHAT DOES FRAUD LOOK LIKE TODAY?

While earlier fraud cases relied heavily on traditional accounting manipulation, contemporary schemes leverage digital assets, artificial intelligence (AI) automation, and the anonymity of decentralized finance (DeFi). For reference, let’s look at some recent examples:

• In 2024, three cryptocurrency companies—Gotbit, ZM Quant, and CLS Global—and 15 people were charged with engaging in widespread fraud and market manipulation. According to an October 2024 Reuters’ article, the companies engaged in sham trades to artificially inflate the trading volume of various cryptocurrency tokens before selling them off, leaving innocent investors “holding the bag.”
  
  
• In early 2024, an employee of UK engineering firm Arup was tricked into paying $25 million to fraudsters using deepfake technology, posing as the company’s chief financial officer in a video conference call. As a February 2024 World Economic Forum article warns, “[t]his wasn’t a traditional cyberattack, the kind that compromises a company’s digital systems. This attack used psychology and sophisticated deepfake technology to gain the employee’s confidence.”
  
  
• In February 2025, a Canadian man was charged with exploiting vulnerabilities in two DeFi protocols to fraudulently obtain about $65 million from investors. According to a United States Department of Justice press release, from 2021-2023, the fraudster allegedly borrowed hundreds of millions of dollars in digital tokens, which he used to engage in deceptive trading that he knew would cause the protocols’ smart contracts to falsely calculate key variables.

RISING SOPHISTICATION

With rapid advancements in technology like never before, financial crime will become more sophisticated over time, creating even more unique challenges for organizations to consider. For instance, biometric security (once seen as a safeguard) may even become a new target for fraud, as criminals find ways to manipulate facial recognition and fingerprint authentication.

With advancements in quantum computing, cybersecurity threats with the potential to break existing encryption protocols are also expected to escalate. Meanwhile, social media has already become a powerful tool for financial deception, allowing fraudsters to manipulate markets and public perception with ease. Meme stock manipulation, for instance, has demonstrated how viral trends can be exploited for financial gain, while deepfake-generated financial announcements could further destabilize markets.

Another growing concern is the rise of environmental, social, and governance-related fraud. As demand for sustainable investments increases, fraudulent greenwashing schemes may become more prevalent, misleading investors into supporting companies that falsely claim eco-friendly or ethical practices.

Of course, there’s some good news in all of this: As fraud continues to evolve, so do detection methods. AI and machine learning are now being deployed to detect anomalies in financial transactions, while regulators have tightened compliance measures through enhanced Know Your Customer and anti-money laundering laws. Improved whistleblower protections have also played a role in exposing fraudulent schemes.

Overall, the past decade has shown that financial crimes are no longer confined to traditional manipulation, making vigilance, regulatory adaptation, and forensic accounting expertise more critical than ever. Understanding these latest trends will be essential for businesses, regulators, and investors to stay ahead and protect themselves in an increasingly digital world.

Related Content:

• Vulnerable Targets: How Not-for-Profits Can Prevent Money Laundering and Fraud: With fewer resources and oversight, not-for-profits can be more susceptible to financial wrongdoing. Here, three experts discuss how accounting and finance teams can prevent these attacks.
• How to Fortify Your Organization Against Fraud: Companies lose billions of dollars to fraud each year—yours need not be one of them.