Thefts from cryptocurrency exchanges continue despite increased security
Although exchanges, wallets and other cryptocurrency custody services are strengthening their defenses, attackers continue to innovate and outpace even the current state of the cybersecurity art, according to CipherTrace.
Even Binance, the world’s number-one cryptocurrency exchange, lost tens of millions of crypto assets to a cyberattack perpetrated by sophisticated hackers using a lethal cocktail of phishing, viruses and other attack vectors.
In total, cybercriminals looted $125 million in Bitcoin, Ethereum and other digital assets from exchanges in Q2 2019. However, CipherTrace based this theft number on the price of the assets at the time they were stolen.
In actuality, given the recent price movement of Bitcoin and other tokens, this value is likely much greater since they more than doubled in value during Q2 2019. Additional exit scams, thefts and dark market takedowns still under investigation could push the total losses much higher.
2019 shaping up as the year of the exit scam
Additionally, this quarter’s report identifies a concerning trend that may once again overshadow the cryptocurrency losses due to cyberattacks—the “Exit Scam.”
While thefts due to cyberattacks have netted criminals US$287 million during the first half of 2019, several alleged exit scams under investigation have resulted in fraudsters making away with more than $3.1 billion dollars.
In aggregate, hacks, exit scams and misappropriation of funds fraud, cost cryptocurrency exchanges, investors and users US$4.26 billion in the first half.
Global regulatory imperative as FATF travel rule now applies to cryptocurrency
Owing to the acceleration of hacks and frauds in tandem with related money laundering—as well as high-profile abuses of cryptocurrency by rogue countries to evade sanctions—regulatory bodies have increased their oversight of virtual assets.
For a major example, the Financial Action Task Force (FATF) rocked the crypto economy with a new “travel rule”—for which the G20 announced its full support in Osaka in June—that requires transactions between exchanges to include personal information about the sender and the receiver of funds similar to international bank wire and SWIFT transfers of fiat funds.
Facebook awakens policy makers with announcement of Libra
Cryptocurrency regulation is now obviously viewed as an imperative across the globe, and there is increasing political concern about the potential financial disruption blockchain technologies pose.
In particular, Facebook’s entrance into the cryptocurrency world by announcing Libra ignited a fury of debate in global capitals regarding the risks and rewards of these new financial tools.