A new report from CipherTrace suggests that hackers stole $1.7 billion worth of digital currency from investors in 2018 as organized crime is becoming more common.
A separate report from Chainalysis suggests that two sophisticated criminal groups stole $1 billion, accounting for a massive portion of total cryptocurrency hacks.
The Problem With Crypto Security
The stolen funds highlight the security problem the crypto industry faces, which it has yet been able to solve.
According to the report from CipherTrace Cryptocurrency Intelligence, $1 billion of the total amount was stolen from digital currency exchanges.
The falling prices of cryptocurrencies did not affect the number of crimes in this sector.
Because of the price decline of cryptocurrencies in 2018, the total dollar value is less, but regarding the volume of coins stolen, 2018 marked a 3.6x increase compared to 2017 and a 7x increase compared to 2016.
CipherTrace CEO Dave Jevans said:
“These numbers only represent the loot from crypto crimes that CipherTrace can validate; we have little doubt that the true number of crypto asset losses is much larger.”
Two Crypto Groups Behind the Loot
In a separate report released this week, Chainalysis noted the rise of organized crime in the crypto sector.
Chainalysis noted that the $1.7 billion figure was similar to their findings and that criminal activity involving cryptocurrencies has “grown significantly” in the last 18 months.
Roughly $1 billion of the total amount of stolen funds can be attributed to just two groups. The average value of each of their hacks was $90 million during the year.
Philip Gradwell, Chainalysis’ chief economist, said in a CNBC interview:
“When we look at these patterns it’s clear these are large, sophisticated hacking groups.”
These groups often work with complex methodologies, moving the stolen coins through personal wallets and exchanges and then go silent for around 40 days to wait for the interest to die down before they cash out.
The two hacking groups are labeled “Alpha” and “Beta” of which Alpha is the bigger and more sophisticated group.
Gradwell, however, said that the stolen coins make up only a small share of the overall crypto market.
For instance, the amount stolen from exchanges was only equal to 1% of Bitcoin’s total value.
He said that the level of criminal activity is still relatively low and that crypto’s main use case is still that of a financial asset.