During all of 2018, a whopping $1.7 billion worth of cryptocurrency was reportedly stolen. These funds come from a wide variety of sources – e.g. custodial services such as wallets, cryptocurrency exchanges, as well as ICO exit scams.
Cryptocurrency thieves may not be able to launder their stolen funds
Furthermore, this amount is a substantial increase from 2017. Nevertheless, the increased awareness and understanding of cryptocurrencies during 2018 may very well be the reason for this uptick in cryptocurrency theft.
However, the Q4 CipherTrace Cryptocurrency Anti-Money Laundering Report has recently indicated that the thieves will run into some problems. Namely, this relates to how they intend to launder the stolen funds.
Moreover, international regulations will get noticeably stiffer later in the year. This will also make it harder to launder cryptocurrency – meaning that cryptocurrency thieves may, in fact, get a serving of some poetic justice.
Nonetheless, the mere fact that nearly $2 billion worth of cryptocurrency was stolen in 2018 should be alarming. According to Dave Jevans, the CEO of CipherTrace and the co-chair of the Cryptocurrency Working Group at APWG.org, this was largely the result of the cryptocurrency sector’s young age.
$950 million of the stolen funds taken from ”immature” platforms
In fact, out of the funds stolen in 2018, more than $950 million came from custodial services and cryptocurrency exchanges. This represents a 3.6x increase from during 2017.
According to Jevans, ”many exchanges have only been operational for two years or less. They have not invested in the security technologies and practices needed to safeguard IT systems, employees, and critical data.”
He then went on to criticize the practices of some cryptocurrency firms, which seemingly neglect to implement proper security features on their platforms.
”These cryptocurrency companies are at risk of having a simple file of cryptographic private keys stolen that can give the hackers $30M to $500M in profit. Yet these companies are immature in their security team funding, training and implementation.”
The main hurdle to clear in creating secure cryptocurrency platforms seems to be raising sufficient security infrastructure investment and education. Put simply, Jevens argues that companies seemingly ”don’t know better” when it comes to implementing sufficient security measures.
Nevertheless, the third quarter of 2019 will see a new wave of anti-money laundering and counter-financing terrorism regulations come into effect. Specifically, these come as part of new international standards, determined by the Financial Action Task Force.
Jevens also noted that this will likely mean that ”criminals will increasingly be detected and rejected at compliant companies as regulations are enforced. This will force cybercriminals into the darker alleys of the Internet and the cryptocurrency ecosystem.”
Image Source: “Flickr”
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.