A recently published report claims that in 2018, $1.7 billion mark was lost to scams and thefts, a figure 3.6 times more than the amount stolen in 2017.
According to CipherTrace Cryptocurrency Intelligence’s report, $950 million was stolen from cryptocurrency exchanges, the lion’s share coming from the hack of Japanese exchange Coincheck which lost over $500 million of NEM in early 2018.
On top of these thefts, the research found investors and exchange users lost at least $725 million in cryptocurrency in 2018 to exit scams such as fraudulent ICOs, phoney exchange hacks, and Ponzi schemes.
The authors of the report believe that the cryptocurrency criminal activity may be slowed by impending regulation. Dave Jevans, CEO of CipherTrace elaborates: “Pending global legislation will hamstring many criminals, global gangs, and terrorist groups by greatly reducing their opportunities to launder… However this means that bad actors will be driven to jurisdictions with weak regulatory oversight.”
The report identified the Top 10 Trending Crypto Threats:
- SIM swapping: An identity theft technique that takes over a victim’s mobile device to steal credentials and break into wallets or exchange accounts to steal cryptocurrency.
- Crypto dusting: A new form of blockchain spam that erodes the recipient’s reputation by sending cryptocurrency from known money mixers.
- Sanction evasion: Nation states that use cryptocurrencies to circumvent sanctions and that has been promoted by the Iranian and Venezuelan governments.
- Next-generation crypto mixers: Money laundering services that promise to exchange tainted tokens for freshly mined crypto, but, in reality, cleanse cryptocurrency through exchanges.
- Shadow money service businesses (MSBs): Unlicensed MSBs that bank cryptocurrency without the knowledge of host financial institutions, thus exposing banks to unknown risk.
- Datacenter-scale cryptojacking: Takeover attacks that mine for cryptocurrency at a massive scale and that have been discovered in datacentres, including AWS.
- Lightning Network transactions: Enabling anonymous bitcoin transactions by going “off-chain” and now scaling to $2,150,000.
- Decentralised stable coins: Stabilised tokens that can be designed for use as hard-to-trace private coins.
- Email extortion and bomb threats: Mass-customised phishing email campaigns by cyber-extortionists using old passwords and spouse names and that demand bitcoin. Bomb threat extortion scams spiked in December.
- Crypto robbing ransomware: New malware distributed by cyber-extortionists that empties cryptocurrency wallets and steals private keys while holding user data hostage.
Jevans added in an interview with CNBC that crime is seemingly becoming more organised in the cryptocurrency space: “These aren’t street thugs — these are people who have masters degrees in computer science. We’re starting to see more organisation in the space with professional gangs bankrolling computer scientists.”