Cybersecurity firm, CipherTrace have reported that losses from cryptocurrency theft from exchanges and fraud-related activities has climbed in the first quarter of the year to $1.2 billion. This is 70 percent of the level for the entire 2018.
CipherTrace also found in their research that there is currently a “major hole” in the cryptocurrency regulatory world regarding cross-border payments. An analysis of 164 million Bitcoin transactions showed that the payments from US exchanges to offshore exchanges increased from 45 percent in Q1 2017 to 66 percent in Q1 2019. This is noteworthy because according to the International Consortium of Investigative Journalists, $8.7 trillion, or 11.5 percent of the world’s wealth, is hidden offshore.
The report states that once these payments reach exchanges and wallets in other parts of the world they fall off the radar of all US authorities. “For now, it is uncertain if these cross border inter-exchange payments trigger the FinCEN requirement that MSBs must keep a five-year record of currency exchanges greater than $1000 and money transfers greater than $3000. But experts recommend MSBs retain tax ID/SSN for these transactions”.
Crypto Criminals Vary Their Tactics
Crypto crime in 2018 was dominated by global exchange hacks, but they found that this year, insiders, extortionists and scammers are diversifying their criminal activities. One example is the kidnapping of a billionaire’s wife in Norway. The kidnappers demanded a $10.3 million ransom, to be paid with the privacy coin, Monero. To date, the woman is still being held captive.
“Crypto crime has gotten worse because regulations are still weakly enforced,” said CipherTrace CEO, Dave Jevans. “Europe broadly has not implemented its regulations yet and the cybercriminal community continues to grow”.
As well as cryptocurrency thefts from infrastructure and wallets, investors lost close to $200 million from exit scams where founders and executives embezzled users’ custodial crypto funds then disappeared.
CipherTrace say that these losses are only the ones that are visible and that the number is definitely much higher.