By taking advantage of flaws in virtual systems and user behavior, such as malware infections, phishing scams and illegal access to personal and financial information, cybercriminals prey on the metaverse.

Cybercriminals may target the metaverse in a variety of ways, including:

• Phishing scams: Thieves may employ phishing techniques to deceive victims into disclosing personal information or login credentials, which can then be used for identity or data theft or other unlawful acts.
• Hacking: To steal money or personal information, criminals may try to hack into user accounts or metaverse platforms.
• Malware: To access sensitive data or carry out illicit operations, criminals may use malware to infect virtual environments or devices that support the metaverse.
• Frauds: Criminals may leverage the anonymity and lax regulation of the metaverse to carry out scams such as Ponzi or pyramid schemes.
• Ransomware: Thieves may use ransomware to encrypt a user’s digital possessions or personal data before requesting payment in exchange for the decryption key.
• Exploiting virtual goods and assets: Cybercriminals may use bots or other tools to buy virtual goods and assets, which they then sell on the black market for real money. 
• Creating fake digital assets: Criminals may make false virtual assets and sell them to unwary buyers, causing the victims to suffer financial loss.
• Social engineering: Thieves may take advantage of the metaverse’s social elements to win over people’s trust before defrauding them.

Related: How are metaverse assets taxed?

The “Crypto Crime Cartel” case is one real-world instance of cybercrime in the metaverse. In 2020, it was discovered that a group of cybercriminals had been working in the metaverse, more specifically in the online community of Second Life.

They tricked customers into submitting log-in and personal information via a phishing scam, which they then utilized to steal virtual money and digital assets. The group also perpetrated identity theft and other financial crimes in the real world using the stolen information. Money-laundering crypto criminals were successful in stealing digital assets and currencies worth millions of dollars.

This example demonstrates how cybercriminals might use the anonymity and lax regulation of the metaverse to carry out unlawful acts. It emphasizes the significance of exercising caution when using virtual worlds and taking precautions to safeguard private data and digital assets, such as using strong passwords, being wary of unsolicited requests for personal information and notifying the appropriate authorities of any suspicious activity.

The Decentral Games hack is just another instance of financial crime in the metaverse. A group of hackers attacked Decentral Games, a well-known metaverse gaming site built on the Ethereum blockchain, in 2021 by taking advantage of a flaw in the smart contract. They were able to steal Ether (ETH) and other cryptocurrencies valued at more than $8 million from users of the network.

This illustration shows how susceptible smart contracts and decentralized systems can be to hackers and other sorts of cyberattacks. It also demonstrates how a lack of oversight and regulation in the crypto and metaverse industries can make it simpler for criminals to commit cybercrimes and steal substantial sums of money.