A recent study conducted by CipherTrace, a security research firm, has revealed that a total of $4.4 billion was lost in 2019 through cryptocurrency-related fraud and theft. These damning revelations were established following a comprehensive analysis of 120 most popular cryptocurrency exchanges and patterns in crypto-related crimes.
The findings, which are published in the firm’s Cryptocurrency Anti-Money Laundering Report, 2019 Q3 revealed serious security lapses across exchanges that left them vulnerable to attacks. The report found issues with exchanges’ compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. Of the 120 crypto exchanges analysed, 35% have strong KYC standards, 41% have “porous” standards and 24% have weak KYC standards. 32% of the top-120 exchanges trade privacy coins.
As per the research findings, there was a significant reduction in the number of crypto crime incidents, especially in Q3 2019. This period recorded the lowest number of incidences in 2 years as indicated in the report.
This quarter, cybercriminals stole $6.5 million from cryptocurrency exchanges, while insiders bilked cryptocurrency users out of $9 million in exit scams and Ponzi schemes. This total of $15.5 million represents the smallest number of cryptocurrency crimes of any quarter in the past several years.
Notwithstanding, the total amounts lost continues to rise with thieves targeting larger sums in the attacks. Consequently, total losses from cryptocurrency-related theft skyrocketed from $1.7 billion in 2018 to the current $4.4 billion.
This huge sum of losses in 2019 is attributable to two particular scams that account for a large proportion of lost funds. The PlusToken scheme walked away with $2.9 billion of investors’ funds while QuadrigaCX crypto exchange debacle resulted in losses totaling $195 million.
The report also states that thieves are crafting some new and sophisticated techniques to steal the digital assets from exchanges and unsuspecting individuals. For instance, cyber criminals are targeting individuals with malware and cryptojacking to obfuscate the flow of cryptocurrencies without the users’ knowledge. Evidence of this was found in a recent high profile case where cyber criminals behind the Stantinko botnet targeted users with a crypto stealing malware that reportedly infected close to half a million devices.
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