 Cybercrime on the ethereum blockchainLars Hornuf, Paul P. Momtaz, Rachel J. Nam and Ye Yuan Journal of Banking & Finance, 2025, vol. 175, issue C Abstract: We examine how cybercrime impacts victims’ risk-taking and returns. The results from our difference-in-differences analysis of a sample of victim and matched non-victim investors on the Ethereum blockchain are in line with prospect theory and suggest that victims increase their long-term total risk-taking after losing part of their wealth, leading to lower risk-adjusted returns in the post-cybercrime period. Victims’ long-term total risk-taking increases because they increase diversifiable risk due to victims’ post-cybercrime withdrawal from altcoins. At the same time, the reduction in risk-adjusted returns correlates with increased trading activity and churn, due plausibly to managing cybercrime exposure. In the cross-section of Ethereum addresses, we show that the most affluent victims take a systematic approach to restore their pre-cybercrime wealth level, while the least affluent victims turn into gamblers. Finally, a parsimonious forensic model explains a good part of the addresses’ probability of being involved in cybercrime, on both the victim and the cybercriminal side. Keywords: Ethereum blockchain; Market manipulation; Financial fraud; Token investment scam; Cybercrime; Cryptocurrency (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:175:y:2025:i:c:s0378426625000391 DOI: 10.1016/j.jbankfin.2025.107419 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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