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Fraud and embezzlement are fraudogenic because people often make the choice to continue the game rather than accept a punishment for X, which requires putting a discoverable lie on the record and then increasing the stakes (and the rate at which the shadow liability grows). This causes frauds to often expand until they implode.

This is covered at length in a great book, Lying for Money. Specific examples in Bitcoinland include Mt. Gox, which survived through fraud for 3 years after it needed to wind up, and Bitfinex/Tether, which has not yet collapsed from the billion dollar fraud they are perpetuating.

>Bitfinex/Tether, which has not yet collapsed from the billion dollar fraud they are perpetuating.

Citation very much needed.

> After the theft, Montroll transferred some of his own bitcoin holdings to conceal the losses, according to the DOJ’s complaint. > https://www.cnbc.com/2018/03/05/founder-of-defunct-bitcoin-e...

Perhaps he thought he could just cover it up by using his own funds to cover the losses.

perhaps

Most humans aren't cold thinking machines,so... mistakes are made.