Crypto Thefts, Hacks & Frauds Totaled $1.36 billion in First Five Months of 2020

COVID-19 isn’t the only concern for the world to deal with. Crypto Thefts, Hacks & Frauds are adding extra weight to this worry, as it amounted $1.36 billion in the first five months of 2020 alone. A report titled ‘Spring 2020 Cryptocurrency Crime and Anti-Money Laundering’ from ChiperTrace cites that 2020 could see the second-highest value in crypto crimes ever recorded. Fraud and misappropriation accounts for the most of the year’s stolen crypto compared to hacks and thefts (98 percent of the total $1.36 billion stolen were due to fraud & misappropriation).

Contributing to the high total value netted from crypto crimes are coronavirus-related scams. While governments funnel resources into mitigating detrimental health and economic impacts of the pandemic, criminals are taking advantage of the lack of oversight resulting from the need for urgent action. COVID-19-related fraud can take the form of impersonations of legitimate entities like the Red Cross to extract personal information and/or payment in cryptocurrencies, applications that claim to support victims with information but are actually spying on users, and the sale of PPE, supposed treatments, testing kits, and phishing kits. Though the majority of COVID-19-related products sold on darknet markets did not see many sales, phishing kits were relatively successful.

Though the majority of COVID 19 related products sold on darknet markets did not see many sales phishing kits were relatively successful.

The data also reveals that on the regulatory front, 74 percent of the bitcoin moved in exchange-to-exchange transactions was cross-border. This highlights the need for exchanges to adopt appropriate cross-border controls to ensure AML & CTF compliance. Most of these thefts, frauds and hacks are executed by luring victims off legitimate platforms into chat rooms where payment in bitcoin can be requested.

On the other hand, the global average of direct criminal funds received by exchanges dropped 47 percent in 2019, which marks a three-year low of cryptocurrency exchanges around the world, with only 0.17 percent of funds received by exchanges last year came directly from criminal sources. This indicates that effective implementation of AML measures around the world is creating a roadblock for criminals to offload their illicit funds directly into cryptocurrency exchanges.

The Finnish exchanges topped the list of highest percentage of criminal BTC received for the third year in a row, with 12.01 percent of all BTC funds received coming directly from criminal sources. While Russian exchanges were the second destination for criminal frauds in 2019 with 5.23 percent of all frauds received by the exchanges coming directly from criminal sources, UK exchanges ranked third in highest percentage of BTC received directly from criminal sources last year.