The popularity and resultant price surge of Bitcoin and its ilk will become a magnet for cybercrime and hackers vying to get an illicit profit from it in 2018. The price to be paid for the success of cryptocurrencies is the tsunami of crime and malevolent activity that will follow.
In many cases, the crime wave has already begun. According to reports earlier this month, the SEC announced that it had shut down the Plexcoin ICO for allegedly defrauding investors of $15 million. There is a well-documented inherent risk with investing in cryptocurrencies on unregulated exchanges and wallets. However, hacking will post the greatest threat going forward.
According to the US Department of Homeland Security, a third of all Bitcoin exchanges were hacked between 2009 and 2015, and an escalating number of one-off scams and attacks on individual investors have been occurring during the same period. Crypto heists are extremely lucrative at the moment, with prices reaching all-time highs just a week ago. This will incentivize hacking collectives to expand beyond their regular activities, which include ransomware, personal identity theft, and banking Trojans.
Unlike regular banks that are insured, there is no such safety net with cryptocurrencies, and there are more methods of exploitation open to hackers and cyber criminals. Investors that lose to theft, fraud, or exchange account freezes will not get reimbursed.
Crypto Crime Wave
If the past is anything to go by, the digital incursions have already started in earnest. Hackers have already targeted cryptocurrency exchanges, digital wallets, ICOs, Decentralized Autonomous Organizations, mining companies, virtual private servers, and hosting services.
Just this month, Bitcoin mining company NiceHash was hacked, leading to more than $60 million in losses for its customers. Last month was the Tether hack, which resulted in losses of over $30 million, and the list doesn’t stop there. Last year, the world’s largest exchange, Bitfinex, was hacked of 120,000 bitcoins that were worth an estimated $75 million at the time they were stolen.
The infamous DAO hack of June 2016 resulted in the loss of 3.6 million Ether, which went straight into the attacker’s Child DAO account. Developers were forced to soft fork the platform to prevent further losses. Tokyo-based exchange Mt. Gox filed for bankruptcy in 2014 after $800 million in Bitcoin was stolen, and the list goes on.
In addition to hacking, there have been DDOS attacks, ICO scams, and phishing attacks on individual investors. Research firm Chainalysis estimates that as much as $225 million has been stolen from cryptocurrency investors this year alone. Next year will not be an improvement for cybercrime in the crypto industry.
Are you worried about the crypto crime wave? Share your thoughts in the comments below.
Images courtesy of Pixabay and Bitcoinist archives.