What Drives Financial Fraud? One Word: Greed

From the high-stakes dramas of Wall Street in the 1980s to the crypto rug pulls of the 2020s, the story behind most financial crimes tends to revolve around a single, potent human emotion: greed.

Greed has shaped the rise and fall of empires, driven market bubbles, and sparked some of the most notorious fraud cases in history—from Enron and Bernie Madoff to meme coins and multimillion-dollar crypto heists. But beneath every scandal and every sensational headline lies a troubling truth: financial fraud doesn’t start with technology. It starts with psychology.

Greed: The Emotional Engine Behind Fraud

Greed is more than just a desire for wealth—it’s the hunger for more, often at any cost. It thrives in environments where opportunity meets opacity, and where emotions override logic. In financial markets, the promise of fast gains often clouds judgment. That’s how smart investors, seasoned executives, and even regulators have been duped time and time again.

Stanford professor Anat Admati describes it succinctly: “The culture of wanting wealth and financial success is strong. Then it meets the human psychological feature of wanting to believe things, or wanting to trust people.” This intersection—ambition colliding with belief—is the emotional birthplace of many fraud schemes.

And it’s not always driven by malicious intent. Sometimes, it’s simply the fear of missing out. Sometimes, it’s survival. As Professor David Smith of Pepperdine notes, financial hardship or desperation can also motivate people to commit fraud.

From L.A. to Kuala Lumpur: A Global Story of Deception

The cautionary tale of the Billionaire Boys Club—a group of young men in 1980s Los Angeles who spiraled from flashy ambition to fraud and even murder—might feel distant in time, but it echoes eerily in today’s financial crimes across Asia-Pacific.

In Hong Kong, a young entrepreneur was recently convicted for orchestrating a crypto scam that lured in retail investors through WhatsApp groups and influencer endorsements. In

Malaysia, hundreds fell victim to a Ponzi scheme disguised as a halal investment platform. In Singapore, scammers have impersonated financial advisors, promising “safe” 12% returns on bogus instruments.

Despite different contexts, the mechanics remain the same: sell the dream, hide the risk, and vanish before the truth catches up.

Crypto: The New Playground for Greed

If Wall Street was the playground for greed in the ’80s, cryptocurrency is its playground now.

The decentralized nature of crypto offers incredible promise—but also peril. Hilary Allen, a law professor at American University, warns that memecoins and hype-driven projects often mirror Ponzi dynamics. In 2023 alone, global losses from crypto-related fraud exceeded $5.6 billion, with the Asia-Pacific region accounting for a growing share of that number, particularly in countries like the Philippines, Vietnam, and India, where first-time investors are entering the market in droves.

The common thread? A lack of oversight, coupled with the illusion of legitimacy. Fraudsters exploit the trust in blockchain technology while operating in murky, unregulated corners of the internet.

And in the absence of proper due diligence, even seasoned investors can be fooled by beautifully designed websites, fake whitepapers, or influencers paid to shill worthless tokens.

The Hidden Risks of Emotional Investing

Fraud doesn’t always take the form of elaborate schemes. It can begin with a friendly email, a trusted colleague, or a flashy social media ad. As fraudsters become more sophisticated, they lean into psychology, using emotional triggers like urgency, exclusivity, or fear of missing out to manipulate victims.

Joseph Steinberg, cybersecurity expert and author, explains: “We’re not wired to perceive threats from far away. We trust screens more than people. If someone approaches you in person asking for your bank details, you’d walk away. But when it’s a text or email that looks legitimate, we second-guess ourselves.”

That insight is critical in Asia, where mobile-first engagement dominates. In countries like Indonesia and Thailand, phishing (via SMS or messaging apps) and investment scams now account for over half of all reported financial cybercrime.

How to Protect Yourself from Greed-Driven Scams

Financial fraud thrives in isolation—when people act on emotional impulses without questioning, verifying, or consulting others. To protect yourself, it’s essential to build habits that temper instinct with discipline:

• Slow down: Urgency is a red flag. Real investments don’t come with countdown timers or limited-time offers.

• Verify sources: If you receive financial advice or investment pitches from unfamiliar contacts, do your own research or consult licensed advisors.

• Diversify: Don’t expose your entire savings to one “hot” opportunity. Allocate risk according to your financial goals and tolerance.

• Ask questions: What problem does this product solve? Who is behind it? Is the business model sustainable? If you can’t find clear, verifiable answers, walk away.

• Stay skeptical, not cynical: Healthy skepticism is your best defense. Greed thrives when people suspend disbelief.

Lessons from the Past, Warnings for the Future

History doesn’t repeat itself, but it certainly rhymes. Whether it’s the Billionaire Boys Club of the ’80s, the Madoff scandal of the 2000s, or the token scams of today, the emotional drivers remain the same: aspiration, fear, and the allure of shortcuts.

As new asset classes emerge—from tokenized real estate to decentralized finance (DeFi) projects—the pace of innovation will continue to outstrip regulation. That gap creates opportunity not just for innovators, but for fraudsters.

Understanding that greed isn’t just an external force—but an internal one—can help us build more resilient financial habits and smarter regulatory frameworks. As investors, leaders, and citizens, our job is not to eliminate risk, but to recognize it.

Because in finance, as in life, the greatest danger often isn’t what we don’t know—but what we want to believe.