Sina Technology: Global cryptocurrency crime has increased significantly, causing losses of $4.4 billion in the first nine months

Beijing time, November 28th morning news, Reuters obtained a report from blockchain evidence company CipherTrace showing that cryptocurrency thefts increased significantly in 2019 compared with last year. As digital exchanges process more and more funds, criminals are also seeking larger-scale thefts.

In the first nine months of this year, losses from digital currency crime rose sharply to $4.4 billion, up more than 150% from $1.7 billion in the whole of 2018.

“The 150% increase in cryptocurrency theft and fraud shows that criminals are adapting to a larger scale,” said Dave Jevans, CEO of CipherTrace. “Criminals are after the money, and the money is here. The time is ripe for them to take it. Small attacks are usually easier to defend, but targeted attacks often yield greater gains.”

Cryptocurrencies have come under intense regulatory scrutiny around the world, despite hopes from developers and market participants to take the asset class mainstream.

CipherTrace data shows that two large thefts are the main reason for the surge in losses this year.

One of the frauds involved a Ponzi scheme involving the cryptocurrency wallet and exchange PlusToken, which caused users to lose $2.9 billion, while another involved the Canadian cryptocurrency exchange QuadrigaCX, where customers lost $195 million.

"Even without these two largest thefts and frauds, we are still seeing a lot of multi-million dollar crime," Jevons said. "This is growing at a relatively steady rate year on year and we don't expect that to change overnight."

He also said that criminal activity worth less than $5 million is often underreported because exchanges and regulatory teams are often focused on larger, existential threats to businesses.

However, CipherTrace also reported that the industry saw only $15.5 million in theft and fraud in the third quarter, the lowest in two years. Jevons said that although the number of attacks reported by the industry is decreasing, the scale of criminals' crimes is still increasing.

CipherTrace has previously noted that the types of crime in the cryptocurrency space have shifted from outright theft to investment exit scams and other fraud by insiders, which also suggests that it is becoming increasingly difficult for criminals to attack exchanges.

"Today's attackers are patient and willing to wait longer for their payouts," Jevons said. "Not only are we seeing more and more $100 million thefts and scams, the actors behind these schemes are also being more cautious, cashing out small amounts to ensure their activity goes undetected."

The report also showed that among the top 120 cryptocurrency exchanges in the world, 65% have weak customer identity verification (KYC) processes. CipherTrace said: "Regulators are seeking to share KYC information globally, which will undoubtedly have an impact."