Cryptocurrency Crime a $4 Billion Industry in 2019: Ciphertrace

Illegal Bitcoin

Scammers are unfortunately picking up on the resurgence of the crypto market.

According to a recent report from industry analytics firm Ciphertrace, bad actors online have managed to make billions through digital asset-related crime in 2019 alone. Youch.

Crypto Slammed by Crime

The report, which is titled “Q2 2019 Cryptocurrency Anti-Money Laundering Report”, found that aggregate losses incurred by investors and firms due to cryptocurrency crime has reached $4.3 billion in the first half of 2019. The report was obtained by CoinDesk.

According to their analysis, only a small portion of these funds was derived from hacks of firms and crypto exchanges. In fact, their report suggests that only around 5% of the $4.3 billion — $227 million to be exact — were sourced from hacking. Indeed, while there have been high-profile exchange hacks in 2019, like the $40 million hack of Binance or the seeming theft of EOS and XRP from Bithumb, the hacks have been relatively small-scale.

Around 20% of the illicit gains were a result of misappropriated funds. Not often are these cases reported on in crypto media, but there have been a few public cases of this occurring. Canadian blockchain startup Vanbex, for instance, was revealed to have misappropriated millions earlier this year.

The rest of the gains were stolen through exit scams. Per the report, the reason why crypto crime has netted criminals such a high sum in H1 2019 is due to a pyramid scheme called “Plus Token”. Media suggests the exchange-turned-scam managed to steal upwards of $2.9 billion from investors.

Interestingly the report made no mention of other scams, like Twitter bots phishing for cryptocurrency, namely Ethereum.

As reported by Blockonomi earlier this year, the Twitter bots trying to swindle crypto investors of their Ethereum and Bitcoin are back in full force. Like before, there are countless bots posting images regarding fake giveaways on Twitter and actually other outlets.

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Scams Rampant in China

It seems that many of these exit scams seem to be originating in China. Crypto Youtuber Boxmining, who is based in Hong Kong and often visits mainland China, has explained in videos that while there are few scams in the West, China is rife with bad actors trying to leverage cryptocurrency.

Earlier this year, a project leveraging the China-based Tron’s brand managed to secure over $30 million worth of funds from Chinese investors, then running away in a clear exit scheme.

More recently, a group of Chinese investors that own the popular Ethereum-based decentralized exchange EtherDelta pulled an exit scam. Dovey Wan, a crypto venture capitalist with roots in China, brought this case to the mainstream via Twitter. The details of this case are still coming to light.

These two cases are far from the first or the last. Over the years, China’s crypto scam scene has been so active that the People’s Bank of China was forced to denounce scams public statements.

Not only are crypto scams stemming from China but hacks too. FireEye Threat Intelligence earlier this month reported that its analysis has revealed that APT41, a hacker group, was working hand-in-hand with some Chinese state entities. Their report, first spotted by industry publication CoinTelegraph, suggested that the Chinese government was sponsoring the collective’s attacks on a number of industries, including healthcare, telecom, fintech, and even crypto firms.

The report also claimed that these hackers managed to successfully deploy “cryptojacking” code, which hijacked the computers of victims to secretly mine Monero (XMR).

It is clear that crypto crime is back on the rise, hence why many politicians and other prominent figures on the global stage have continued to lambast the industry.

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Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business. His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More. He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased reporting.


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2 comments

  1. 4.000. 000. 000 $ scam? Really? But nobody know about the coup. No Police. Not in China or Seoul or BKK. Nothing.
    No news agency write absolut thai.
    Not AFP, DPA or AP. Only fantasy tales and copy and paste. No facts. The only one: i hear from my mobile…bla bla bla

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