Cryptocurrency crime surges with losses hitting US$4.4 billion by end-September - CipherTrace report
- Losses from digital currency crime soared to US$4.4 billion in the first nine months of the year, up more than 150 per cent
Cryptocurrency theft has surged in 2019 compared with last year, with more money flowing through digital exchanges and criminals looking to carry out bigger heists, according to a report from blockchain forensics company CipherTrace obtained by Reuters.
Losses from digital currency crime soared to US$4.4 billion in the first nine months of the year, up more than 150 per cent from US$1.7 billion in all of 2018.
“The 150 per cent increase in crypto theft and fraud reflects how criminals are adapting for bigger and better scores,” Dave Jevans, CipherTrace chief executive officer, told Reuters.
“Criminals chase money and the money is right here and ripe for the taking. Little attacks are often easy to defend against, but targeted attacks are far more lucrative,” he added.
Cryptocurrencies have attracted intense regulatory scrutiny around the world, as developers and market participants in the space seek to push this asset class into the mainstream.
Two large thefts were the main drivers for the surge this year, CipherTrace said.
One of the frauds saw users and customers lose US$2.9 billion from an alleged Ponzi scheme involving crypto wallet and exchange, PlusToken.
China dampens blockchain fever with cryptocurrency trading crackdown
The other significant fraud this year was the US$195 million that customers lost from Canadian crypto exchange QuadrigaCX following the unexpected death of its 30-year-old co-founder and CEO, Gerald Cotten.
“Even without the two biggest thefts and scams, we are still witnessing many multimillion dollar crimes,” Jevans said. “There is a relatively consistent increase in criminal activity year over year and we do not expect that to change overnight.”
He added that crimes valued under US$5 million are often under-reported, as exchanges and police teams focus on the bigger more existential threats to businesses.
CipherTrace reported that the sector saw just US$15.5 million in quarterly thefts and scams in the third quarter, the lowest in two years.
Jevans said that while the industry may be seeing fewer reported attacks, criminals were still making out with “bigger wheelbarrows of cash.”
CipherTrace had previously noted that the type of crime in the crypto sector had shifted from outright thefts to exit scams and other frauds perpetrated by insiders, which showed exchanges have become tougher for criminals to hack.
“Today’s attackers are patient and willing to spend more time waiting for a payout,” said Jevans. “Not only have we seen more and more $100 million thefts and scams, those responsible are acting carefully, only cashing out small amounts to stay under the radar.”
The report also showed that of the top 120 global crypto exchanges, 65 per cent have weak know-your-customer (KYC) requirements.
“It will no doubt have implications as regulators seek to have KYC information shared globally,” said CipherTrace.
For more insights into China tech, sign up for our tech newsletters, subscribe to our award-winning Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.
