2020 on track to become a record-breaking year for crypto-related thefts

By fklivestolearn | Technicity | 4 Jun 2020

Almost $1.4 billion in Cryptocurrency stolen in the first five months of 2020

Blockchain and Crypto analytics company CipherTrace, which provides actionable intelligence to government agencies and businesses, has just published the Crypto & Anti Money Laundering (AML) report for Spring 2020. The report suggests crypto thefts, hacks, and frauds totaled $1.36 billion so far this year — on track to become the second-highest value in crypto crimes ever recorded.

2019 resulted in $4.5 billion lost to cryptocurrency crimes. which Cipher Trace attributed to increasing instances of “insider jobs” at crypto-related businesses (Figure 1). This year, however, nefarious players have capitalized on the coronavirus crisis to launch their crypto-related phishing campaigns, ransomware and darknet marketplace fraud.

Hackers have impersonated reputed institutions like World Health Organization (WHO), the Red Cross & the Centers for Disease Control and Prevention (CDC) in order to trick people — soliciting personal information and/or payments in cryptocurrency. Interestingly, 98% of the stolen funds were by way of fraud and misappropriation, rather than by hacks and direct thefts.

Other forms of misappropriation included virus trackers for smartphones, used for spying on users, or to install ransomware and later demand payment in cryptocurrency to decrypt users’ files. Also popular were darknet markets requesting payment in crypto for COVID-19 diagnostic tests, ostensible vaccines and “cures,” etc.


According to the report, the global average of direct criminal funds received by exchanges dropped 47% in 2019 — marking a three-year low for cryptocurrency exchanges around the world (Figure 2). It also indicated that 74% of the Bitcoin moved in exchange-to-exchange transactions was cross-border, pointing to the urgency of establishing global AML and counterterrorism standards such as those set out by the FATF’s upcoming travel rule


Other notable observations from the reports were as follows:

— Finnish exchanges ranked #1 for the highest percentage (12.1%) of criminal BTC received for the third year in a row, followed by Russia accounting for 5.2% of illicit BTC. Helsinki based LocalBitcoins, one of the largest peer-to-peer (P2P) marketplaces, received over 99% of these criminal funds (Figure 3).


— Direct Payments from Criminal source to Crypto Exchanges dropped to less than 0.1% in Germany, Japan & the United States (Figure 4)


— Funds sent to High-Risk Exchanges from U.S Bitcoin ATMs have grown exponentially over the past three years (Figure 5). Despite this, an overwhelming 87% of the BATM payments still end up in private wallets.


— Despite the regulatory sword of AML & KYC compliance hanging over their heads, the majority of the Virtual Asset Service Providers (VASPs) still have bad or porous KYC. Of the top 500 VASPs reviewed, CipherTrace found that 57% of these VASPs still have weak or porous KYC processes.


The detailed findings of the Report were published on their website.

Originally Published on Medium

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