An electronic asset system includes tamper-resistant electronic wallets that store transferable electronic assets. To break such tamper-resistant wallets, the criminal is expected to spend an initial investment to defeat the tamper-resistant protection. The electronic assets are issued by an institution to a wallet (anonymously or non-anonymously). During expenditure, the electronic assets are transferred from a payer wallet to a payee wallet. The payee wallets routinely submit the transferred assets for possible audit. A fraud detection system samples the assets submitted for audit to detect "bad" assets which have been used in a fraudulent manner. Upon detection, the fraud detection system identifies the electronic wallet that used the bad asset and marks it as a "bad wallet". The fraud detection system compiles a list of bad electronic wallets and distributes the list to warn other wallets of the bad electronic wallets. The list is relatively small since it only contains identities of certificates of bad wallets (and not bad coins) and the certificates have short expiration terms, and hence can be stored locally on each wallet. When a bad wallet next attempts to spend assets (whether fraudulently or not), the intended recipient will check the local hot list of bad wallets and refuse to transact business with the bad wallet.