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Research from CipherTrace for Q1 of 2019 shows that theft and fraudulent activity related to crypto has intensified exponentially in the first quarter of the year.
In the CipherTrace 2018, Q4 Cryptocurrency Anti-Money Laundering (AML) Report it was unveiled that a spectacular amount of $1.7 billion in cryptocurrency was stolen or involved in fraudulent activity last year. While this figure seemed huge at the time, we’re now faced with $1.2 billion stolen just in the first few months of 2019, a massive increase.
The report states:
“Criminals stole more than US$356 million from exchanges and infrastructure during the first quarter of 2019. Among these losses, exit scams—which CipherTrace is considering the implosion of QuadrigaCX to be one—robbed cryptocurrency users of nearly US$195 million. On top of these numbers, the New York Attorney General’s Office revealed what they allege is a fraud involving the loss of $851 million by a major cryptocurrency exchange, Bitfinex. Cybercriminals also developed ingenious new techniques to drain millions more from user accounts and wallets. These thefts only represent the losses that are visible. CipherTrace estimates the true number of crypto asset losses was much higher.”
The significance of these hacks shouldn’t be underestimated. Every time a hacker steals cryptocurrency from an exchange, it makes the industry as a whole less secure and less trustworthy. The cryptocurrency industry has already managed to convince technology savvy risk-takers that they should pay attention to crypto, but if the industry wants to attract the average, more cautious person, security needs to be paramount.
The 2018 report also identified the ‘Top Ten Trending Crypto Threats’ including SIM Swapping (stealing credentials from a victim’s smartphone), Crypto Mixers (Money laundering services that promise to exchange tainted tokens for freshly mined crypto, but in reality, cleanse cryptocurrency through exchanges), and more.
Crypto ransomware also appears to be on the rise. Ransomware is a type of malware that once on a victim’s computer will lock and encrypt the files, promising to release them for a cryptocurrency payment. It’s now clear that these threats are going strong and wreaking havoc in the industry.
CipherTrace Chief Executive Officer Dave Jevans said:
“Crypto crime has gotten worse because regulations are still weakly enforced. Europe broadly has not implemented its regulations yet and the cybercriminal community continues to grow. I would also add that insider issues such as fraud or theft have grown mostly due to operations outside of the U.S. where regulations are poor, or simply due to greed and mismanagement by young management teams at these cryptocurrency companies that are managing hundreds of millions or even billions of dollars.”