Global cryptocurrency crime caused $4.4 billion in losses in 9 months

Reuters reported that, compared with last year, cryptocurrency crime in 2019 has increased significantly. As digital exchanges process more and more funds, criminals looking to carry out bigger heists.

In the first nine months of this year, the digital currency crimes caused to $4.4 billion loss. That is an increase of more than 150% from the $1.7 billion in 2018.

CipherTrace CEO Dave Jevans said: ‘The 150% increase in crypto theft and fraud reflects how criminals are adapting for bigger and better scores. 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.’

As developers and market participants want to mainstream cryptocurrencies, these are subject to strict regulatory scrutiny around the world.

The same source also says that two major thefts were the main reason for the surge in losses this year. The first fraud saw users and customers lose $2.9 billion from an alleged Ponzi scheme involving crypto wallet and exchange, PlusToken. Another fraud case involved QuadrigaCX. That is a Canadian cryptocurrency exchange. This time customers lost $195 million.

Even without the two biggest thefts and scams, we are still witnessing many multi-million dollar crimes,” Jevans said. “There is a relatively consistent increase in criminal activity year over year and we don’t expect that to change overnight.

Why Cryptocurrency Crime Happens?

He also said that criminal activities under $5 million are often underreported. This is because exchanges and regulatory teams usually focus on larger cases.

However, CipherTrace also reported that the value of theft and fraud in this industry was only $15.5 million. That is the lowest rate in the third quarter in two years. Jevons said that the number of attacks reported by the industry is decreasing. Indeed the scale of crimes by criminals is still growing.

CipherTrace has previously stated that the type of crime in the cryptocurrency space has shifted. Direct theft has become an investment exit scam. That fraud is done by insiders. It also shows that it is becoming increasingly difficult for criminals to attack exchanges.

‘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, but those responsible are also acting carefully, only cashing out small amounts to stay under the radar.’

The report also shows that 65% of the world’s top 120 cryptocurrency exchanges have weak know-your-customer (KYC) requirements. CipherTrace said: ‘It will no doubt have implications as regulators seek to have KYC information shared globally.’