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How Crypto Fraud Affects Investor Behavior

A person trading cryptocurrency on a cell phone

LexBlog shared a post that examines the repercussions of fraud on crypto trading platforms, focusing on how it influences the investment behavior of fraud victims. At the heart of the study are these critical questions: Does being a victim of fraud on one crypto platform significantly diminish trust, prompting investors to disengage from other similar platforms? Alternatively, do investors, perceiving potential benefits such as diversification or long-term prospects of cryptocurrencies, redirect their investments from compromised platforms to other crypto platforms?

This post was shared by Alex Nekrasov, Associate Professor of Accounting, University of Illinois Chicago, Ben Lourie, University of California, Irvine, Phong Truong, Pennsylvania State University, and Chenqi Zhu, University of California, Irvine. It is based on their recent article, “Crypto Fraud and Investing Behavior.”