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Cryptocurrency Risks, Fraud Cases, and Financial Performance

Author

Listed:
  • David S. Kerr

    (Turner School of Accountancy, Belk College of Business, University of North Carolina at Charlotte, Charlotte, NC 28262, USA)

  • Karen A. Loveland

    (Department of Management & Marketing, Texas A&M University-Corpus Christi, Corpus Christi, TX 78412, USA)

  • Katherine Taken Smith

    (College of Business, RELLIS Campus, Texas A&M University-Corpus Christi, Bryan, TX 77807, USA)

  • Lawrence Murphy Smith

    (Department of Accounting, College of Business, RELLIS Campus, Texas A&M University-Corpus Christi, Bryan, TX 77807, USA)

Abstract

In this study, we examine major cryptocurrencies, present notable fraud cases, describe fraud risks, and analyze cryptocurrency financial performance. People debate whether cryptocurrency is an investment opportunity, the new Dutch Tulip Bubble, or a giant Ponzi scheme. There have been a number of high-profile fraud cases associated with cryptocurrencies, such as the FTX scandal in late 2022, thereby making fraud a real concern to current and potential future investors. Regarding financial performance, cryptocurrencies experienced a major collapse in value in the most recent period of the study, about three times worse than the major stock market indices. While in prior periods, cryptocurrencies have significantly outperformed stock market indices, recent fraud cases and the extreme volatility of cryptocurrencies indicate that investing in cryptocurrencies comes with much higher risk than traditional stock market investments. The debate over the investment potential of cryptocurrencies continues, whether they have long term value or are simply the new Dutch Tulip Bubble. The study’s findings will be useful to investors, regulators, and academic researchers regarding the cryptocurrency industry.

Suggested Citation

  • David S. Kerr & Karen A. Loveland & Katherine Taken Smith & Lawrence Murphy Smith, 2023. "Cryptocurrency Risks, Fraud Cases, and Financial Performance," Risks, MDPI, vol. 11(3), pages 1-15, February.
    • Handle: RePEc:gam:jrisks:v:11:y:2023:i:3:p:51-:d:1078570
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    References listed on IDEAS

    as
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    2. Ernest N. Biktimirov & Yuanbin Xu, 2019. "Market reactions to changes in the Dow Jones industrial average index," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(5), pages 792-812, May.
    3. Ernest N. Biktimirov & Yuanbin Xu, 2019. "Market reactions to changes in the Dow Jones industrial average index," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(5), pages 792-812, May.
    4. Runyan, Bruce & Smith, Katherine T. & Smith, L. Murphy, 2008. "Implications of Web assurance services on e-commerce," Accounting forum, Elsevier, vol. 32(1), pages 46-61.
    5. Michael Kend & Lan Anh Nguyen, 2020. "Big Data Analytics and Other Emerging Technologies: The Impact on the Australian Audit and Assurance Profession," Australian Accounting Review, CPA Australia, vol. 30(4), pages 269-282, December.
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    Cited by:

    1. Arpaci, Ibrahim, 2023. "Predictors of financial sustainability for cryptocurrencies: An empirical study using a hybrid SEM-ANN approach," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    2. Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Miguel Ángel Echarte Fernández & David Sanz-Bas, 2024. "Bitcoin’s bubbly behaviors: does it resemble other financial bubbles of the past?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.

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