Cryptocurrency theft hits nearly $1 billion in first
nine months: report
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[October 10, 2018]
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Theft of
cryptocurrencies through hacking of exchanges and trading platforms
soared to $927 million in the first nine months of the year, up nearly
250 percent from the level seen in 2017, according to a report from
U.S.-based cyber security firm CipherTrace released on Wednesday.
The report, which looks at criminal activity and money laundering in the
digital currency market, also showed a steadily growing number of
smaller thefts in the $20-60 million range, totaling $173 million in the
third quarter.
Digital currencies stolen from exchanges in 2017 totaled just $266
million, according to a previous report from CipherTrace.
Bitcoin's popularity and the emergence of more than 1,600 other digital
coins or tokens have drawn more hackers into the cryptocurrency space,
expanding opportunities for crime and fraud.
"The regulators are still a couple of years behind because there are
only a few countries that have really applied strong anti-money
laundering laws," Dave Jevans, chief executive officer of CipherTrace,
told Reuters in an interview.
Jevans is also the chairman of the Anti-Phishing Working Group, a global
organization that aims to help solve cyber crime.
He said there are likely 50 percent more criminal transactions than
those that were traced for this report. For instance, CipherTrace is
aware of more than $60 million in cryptocurrency that was stolen but not
reported.
The data also showed that the world's top cryptocurrency exchanges from
countries with weak anti-money laundering regulations (AML) have been
used to launder $2.5 billion worth of bitcoins since 2009. The top 20
virtual currency exchanges in terms of volume were analyzed for the
report.
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A small toy figure is seen on representations of the Bitcoin virtual
currency in this illustration picture, December 26, 2017.
REUTERS/Dado Ruvic/Illustration
The CipherTrace report declined to name those exchanges.
These money-laundered funds represent transactions that CipherTrace was able to
directly monitor and designate as criminal or highly suspect.
In estimating the $2.5 billion, CipherTrace looked at about 350 million
transactions from the 20 exchanges and found 100 million of those with
counterparties. From there, the firm was able to cross-check the 100 million
transactions with its own data on criminal activity.
At the same time, these exchanges have also been used to purchase 236,979
bitcoins worth of criminal services, equivalent to approximately $1.5 billion at
current prices, the report showed.
"All exchanges get these money-laundered funds. You really can't stop them,"
said Jevans.
"And here's the reason why. We learn about the criminal stuff often times after
it actually happened. So there's no way to know in real time. You can know 80-90
percent of the time, but it's impossible to know 100 percent," he added.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)
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