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Crypto Crime Losses Jumped 160% to $4.5B in 2019, CipherTrace Says
Anatol Antonovici | Feb 11, 2020 | 20:00
While the total loss from crypto-related hacking attacks dropped last year, the total losses from cryptocurrency crime jumped to $4.52 billion, from $1.74 billion recorded in 2018. These findings were shared in a report carried out by blockchain forensics firm CipherTrace.
Insider Theft Increased Five Times, CipherTrace Says
In its latest cryptocurrency anti-money laundering report for Q4 2019, CipherTrace presented the highlights for the whole year. The authors said that the total amount of crypto-related thefts and frauds surged by almost 160% to a staggering $4.5 billion. This includes $370.7 million lost in exchange thefts and hacks and $4.1 billion of losses from fraud and misappropriation of funds.
CipherTrace CEO Dave Jevans told Reuters:
We noticed a significant uptick in malicious insiders scamming unsuspecting victims or leaching on their users through Ponzi schemes. Attacks from the inside of organizations lead to significant exits with major consequence to the crypto-ecosystem.
CipherTrace’s findings that losses from crypto exchange thefts and hacks declined last year by 66% coincides with the conclusions of a separate report released in January by Chainalysis. The latter said that the total value stolen from crypto exchanges declined to about $283 million last year, though the number of exchange hacks surged to a record 11 attacks.
Thus, the greatest part of crypto crime losses was due to misappropriation and fraud, which rose by five times, CipherTrace said.
PlusToken, QuadrigaCX Were Main Drivers for the Surge
The report said that two large losses in the first quarter of 2019 were the main cause behind the surge in total losses.
Retail and institutional crypto investors in Asia lost about $3 billion from PlusToken, a Ponzi scheme that acted as a cryptocurrency wallet and exchange service.
Elsewhere, customers of Canada-based crypto exchange QuadrigaCX lost $135 million after its co-founder, who supposedly held the private keys of client’s crypt funds, unexpectedly died.
Interestingly, CipherTrace found that 97% of ransomware uses Bitcoin as the payment rail, which is not surprising, given that BTC is still the most dominant digital currency.
Another finding is that illicit crypto service providers, including some crypto exchanges, have transferred funds on the payment networks of the majority of top ten American retail banks.
Do you think the number of crypto frauds will decline by the end of this year? Share your thoughts in the comments section!
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