Since the industry’s bull run in 2017, recognition, acceptance and actual usage of cryptocurrencies — either as a payment method or an investment product — have steadily increased. However, it’s not only investors and merchants that have their eyes on these digital currencies as criminals are now increasingly targeting exchanges.
Crypto Theft Through Hacks Reached $1.2 Billion and Rising
With their high market value and anonymity, cryptocurrencies proved to be so tempting that criminals just can’t resist their allure. Hackers have successfully launched cyberattacks on a few exchanges in the past and even managed to get away with million-dollar loots in digital coins. For instance, Japan-based exchange Coincheck was hacked early this year in what was dubbed as the biggest crypto heist ever where more than $500 million in digital currencies were stolen.
But what is even more startling is the total amount involved if the tokens lost from these various cyberattack incidents are added up. According to a report by California-based blockchain security firm CipherTrace, a total of $1.2 billion in cryptos were stolen from exchanges over a two-year period.
Of course, there were attempts at recovering these digital currencies. However, the recovery rate is quite low as, according to a Reuters report, only 20 percent of the $1.2 billion tokens, or roughly $240 million, have been recovered.
Losses This Year Could Reach $1.5 Billion
While the $1.2 billion amount, coupled with a very low recovery rate of 20 percent, is indeed worrisome, that’s not the worst part of the situation at all. The even more worrying trend is that crypto thefts continue to rise at an alarming rate. In fact, theft during the first half of 2018 is already three times more than the whole of 2017. If this continues, losses due to hacking this year could reach a staggering $1.5 billion, according to CipherTrace in an interview with Reuters.
CipherTrace CEO Dave Jevans told Reuters:
“Stolen cryptocurrencies are three times bigger this year than last year so the trend is obviously not our friend here.”
Money Laundering Via Cryptos Will Skyrocket
With all these stolen cryptos, it is inevitable that crypto-related money laundering activities would rise as well. After all, these criminals are sophisticated and would use every means at their disposal to erase any trace of theft from their crypto stockpile.
That means that businesses engaged in money laundering will have their hands full this year. In fact, CipherTrace has already identified a few of these entities that provide money laundering services for stolen cryptos, also known as mixers, tumblers, and foggers. The security firm identified 18 such firms such as BestMixer.io, Bitmixer, Helix2, and PrivCoin.oi and revealed that they typically charge 1 to 3 percent for their service.