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Cryptocurrency Theft Hits Nearly $1 Billion in First Nine Months

Cryptocurrency Theft Hits Nearly $1 Billion in First Nine Months

Reading Time: 2 minutes by on October 12, 2018 Bitcoin, Crime, Exchange, Finance, News
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Theft of cryptocurrencies through the hacking of exchanges and trading platforms soared to $927 million in the first nine months of the year. Reuters reported on October 10, 2018, that this figure is up nearly 250 percent from the level seen in 2017, according to a report from U.S.-based cybersecurity firm CipherTrace.

Main Report Highlights

According to the CipherTrace report released on October 10, 2018, cryptocurrency theft achieved by hacking exchanges and trading platforms rose to $927 million in the first nine months of the year, up nearly 250 percent from the level seen in 2017. The report showed a gradually increasing number of smaller thefts in the $20 to 60 million range, adding up to $173 million in the third quarter.

Digital currencies stolen from exchanges in 2017 summed up to $266 million, as reported previously by CipherTrace. Bitcoin’s popularity and the emergence of more than 1,600 other digital coins or tokens have drawn more hackers into the cryptocurrency space, expanding opportunities for crime and fraud.

Speaking to Reuters, Dave Jevans, Chief Executive Officer of CipherTrace said:

“The regulators are still a couple of years behind because there are only a few countries that have really applied strong anti-money laundering laws.”

Jevans is also the chairman of the Anti-Phishing Working Group, a global organization set up to solve cybercrime. According to him, 50 percent more criminal transactions than those that were traced for this report are likely to be out there. For example, CipherTrace is aware of over $60 million in cryptocurrency that was stolen but not announced.

Exchanges Facilitate Money Laundering

The data also showed that the world’s biggest cryptocurrency exchanges from countries that have weak anti-money laundering regulations (AML) had been used to launder bitcoins worth $2.5 billion since 2009. The CipherTrace report did not, however, name the exchanges, but it stated that the laundered funds were from transactions that CipherTrace could directly observe and designate as criminal or highly suspect.

In estimating the $2.5 billion, CipherTrace assessed almost 350 million transactions from the 20 exchanges and found 100 million of those with counterparties, then it cross-checked the 100 million transactions with its data on criminal activity.

The report showed that these exchanges were also used to purchase 236,979 BTC worth of criminal services, equivalent to about $1.5 billion at current prices.

According to Jevans, this is a situation that looks unlikely to change as exchanges have little incentive to crack down on criminals using their platforms to launder illicit funds, and most of the time it is impossible to gain knowledge of criminal activity until after the fact, which gives cybercriminals a clear time advantage. He said:

“All exchanges get these money-laundered funds. You really can’t stop them, and here’s the reason why. We learn about the criminal stuff often times after it actually happened. So there’s no way to know in real time. You can know 80-90 percent of the time, but it’s impossible to know 100 percent.”

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