I like to think of it prisoner's dilemma style: the optimal amount of fraud is zero, the same way the optimal outcome for both prisoners is to both cooperate. But the equilibrium at 2-cooperate is not stable, somebody will gain more utility for themselves by defecting, the same way with 0 KYC on any and all transactions fraud is laughably easy.
Thus, the global optima is one where there is no fraud and everybody cooperates, but it's not a stable optima and we slide to the real world where there are tradeoffs for preventing fraud, and there reaches a point where rational actors deem the tradeoff unacceptable and thus accept some level of fraud.
Thus, the global optima is one where there is no fraud and everybody cooperates, but it's not a stable optima and we slide to the real world where there are tradeoffs for preventing fraud, and there reaches a point where rational actors deem the tradeoff unacceptable and thus accept some level of fraud.