With its high standard of living and tech-savvy residents, Luxembourg is a prime target for both legitimate crypto investments and elaborate scams.
It’s a weekday evening in a sleek Luxembourg home. Around a candlelit dinner table, guests in suits laugh about investments—until the host, with a dramatic breath, places a laptop on the table. A pitch begins: a revolutionary crypto project, poised to change the world. Crypto is everywhere. Even at dinner parties.
What is crypto?
You might not be getting crypto Tupperware invites just yet—but most of us hear or read the word “crypto” on a weekly, if not daily, basis. Cryptocurrency is a digital form of money that uses cryptography to secure transactions. Unlike traditional currencies, most cryptocurrencies operate on decentralised networks, meaning no single authority—such as a central bank—controls them. Like tokenisation (the conversion of real-world assets such as art, stocks or property into digital tokens), crypto transactions are recorded on a blockchain: a tamper-proof public ledger. Bitcoin and Ethereum are the most well-known cryptocurrencies, but by January 2025, Statista had recorded over 10,500 active cryptocurrencies—up from just a few hundred a decade ago.
Who is buying it?
A 2024 Swissquote survey of Luxembourg residents found that nearly half of Gen Z respondents had invested in crypto, compared with 36% of Gen X and just 11% of those aged 59 and over. The data points to a generational shift in risk appetite and investment habits. Digital currencies first emerged in the 1980s with early electronic cash systems like eCash. But it was the launch of Bitcoin in 2009 that triggered the modern crypto era.
Fifteen years later, the popularity of crypto continues to soar. One driving force is the increasing focus on personal financial independence, especially amid concerns over the long-term viability of state pension schemes. Swissquote found that nearly two-thirds of Luxembourg-based crypto investors were motivated by the desire to grow their wealth. Other accelerants include the first COVID lockdown in 2020, when furloughed workers suddenly had time—and disposable income—to explore speculative investing. Finfluencers were quick to exploit this, flaunting lavish lifestyles online to sell the promise of quick profits and creating intense FOMO among first-time investors.
Inside the crypto meetup
On a dark, rainy Tuesday in January, the streets of Luxembourg City are empty. One bar on Place d’Armes, however, is buzzing. I step inside and a dozen men in jeans, shirts and sleeveless padded coats turn towards me.
“I’m here for the monthly blockchain meetup,” I say. One man, still wearing a woollen coat and scarf indoors, nods and introduces himself as Jean. I’d guess he’s in his early thirties. He’s polite and compliments my French as I explain that I’m a beginner wanting to understand crypto better.
“How did you start?” I ask.
“I began about eight years ago,” he says, adding that he focuses mostly on the two main cryptocurrencies: Bitcoin and Ethereum.
I join a group of two women and a man roughly in his fifties. The latter jokes: “If you want to make a million in France, you have to start with two million.” He’s unimpressed by the crippling tax regime in the neighbouring country. Luxembourg, he points out, is far more favourable. Gains from selling crypto assets held for more than six months are generally tax-exempt—provided the activity is not considered professional trading. I already know that Luxembourg is home to a number of crypto trading platforms, either licensed locally or operating under EU regulation, which lowers investor risk. But that doesn’t mean locals haven’t lost money. “Everyone has horror stories,” the event organiser tells me before I leave. He doesn’t elaborate—whether he’s referring to badly timed investments or outright scams remains unclear. Either way, he’s reluctant to say more.
$12 billion lost to scams
Crypto’s appeal lies in its speed, low fees, anonymity and global reach. But these same traits make it a magnet for fraud. According to crypto research firm Chainalysis, scam-related activity has grown by 24% globally every year since 2020. The firm forecast that 2024 would be a record year, with scams draining $12 billion from unsuspecting investors—fuelled by AI-generated personas and increasingly complex schemes.
Luxembourg is not immune. Its affluence and high internet penetration make it an attractive hunting ground. The country’s cybercrime unit has investigated 58 crypto scams since 2021—a figure that only scratches the surface. “There are certainly cases which have not been reported to the police at all,” a spokesperson confirmed.
There’s no typical victim profile. “People of different ages and professions have been victims of fake crypto trading platforms, after having been lured in by specific advertisements on social media or as a result of a love scam,” the police said. “Quite often, 5- to 6-digit sums are lost in these schemes.”
According to Bee Secure—a free, anonymous helpline for online safety—the most vulnerable group is people over 60, many of whom have substantial savings. “In one case, the individual who called us lost over €200,000 in a scam. They borrowed money from friends and family and then went to the bank,” said Igor Loran, technical coordinator at Bee Secure. “The bank alerted lawyers and then the police got involved.”
The price of ignorance
Loran explained that the caller had been caught in a case of money mauling—a form of money laundering where people unknowingly transfer illegal funds through their own bank or crypto accounts. Other scams include pump-and-dump schemes, where the price of a token is artificially inflated through hype, then sold off at a profit—leaving other investors with worthless assets. His advice: “If you don’t understand how it works, then don’t do it. If you want to earn money, it’s always better to pay for advice.”
Will regulation save us?
In December 2024, the EU’s Markets in Crypto-Assets (MiCA) regulation came into force, bringing tighter rules for crypto-asset service providers (CASPs). These include mandatory licensing, stricter anti-money laundering measures, and controls to prevent market abuse.
But regulation is only part of the solution. Unlicensed operators will continue to find new ways to appear credible. That’s why education remains critical. “If an investment promises guaranteed high returns, it is likely fraud,” Loran warns. “Do not believe the guy, who is 20 years old, promising you €100k+ per month, having a villa, shiny jewellery, sitting in a Lamborghini or a yacht, surrounded by models or travelling across the world!”
As crypto moves further into the mainstream, so too do the risks. In this digital gold rush, scepticism may be the most valuable currency of all.
This article was published in Silicon Luxembourg magazine.
