Digital Assets: 2020 A Gravy Train for Crypto Bad Actors; $1.36B Siphoned in Five Months

June 3, 2020 | Digital Assets, News
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A report from Ciphertrace puts the spotlight on shenanigans in the crypto-assets sector.

CipherTrace’s latest report, “Cryptocurrency Crime and Anti-Money Laundering Report, Spring 2020,” claims that crypto-crimes during the first five months of 2020 netted their perpetrators $1.36 billion. At this rate, 2020 could well achieve the dubious distinction of recording the second-highest value in crypto crimes ever recorded. In 2019, crypto-criminals made off with $4.5 billion. (REUTERS)

Of hacks, thefts, fraud, and misappropriation

CipherTrace says the bulk of 2020’s criminal haul of $1.36 billion was attributable to fraud and misappropriation (98%) while hacks and thefts accounted for the negligible balance.

Coronavirus-related frauds and phishing sites abounded and were the MO of choice. Generally, victims were lured off genuine platforms into chat rooms to enter a crypto transaction.

The lion’s share of the $1.36 billion pickings went to a billion-dollar Ponzi scheme by Wotoken in China. Over 715,000 victims lost about $1 billion to criminal Wotoken operators.

“Consumers, investors, and users continue to adopt cryptocurrency at a massive rate and it is by far the fastest-growing payment system on the planet,” Dave Jevans, CipherTrace chief executive officer, told Reuters. “At one trillion dollars in annual payments, cryptocurrency payments have grown from zero to 7% in 10 years, making this volume of funds attractive to bad actors.”

Crypto exchanges and illicit funds

Finnish exchanges’ affinity for illicit funds continued for the third year in a row in 2019. They topped the charts – receiving 12.01% of BTC funds from criminal sources. LocalBitcoins, a peer-to-peer platform, accounted for 99% of these funds.

Russian exchanges received 5.23% of BTC from criminals. Of this, 86.8% came from Hydra Market—a Russian dark market.

Other insights

  • 74% of the bitcoin moved in exchange-to-exchange transactions were crossborder. This underlines the importance of the impending Travel Rule implementation
  • the global average of criminal funds sent directly to exchanges dropped 47% in 2019, suggesting improving efficiency of crypto AML measures
  • the percentage of funds sent to high-risk exchanges from US BATMs has doubled every year since 2017, indicating the possibility of money laundering

CipherTrace

CipherTrace is a data and cyber-security firm in the crypto-asset sector. It has developed the world’s most complete and accurate cryptocurrency intelligence and forensics, covering more than 800 currencies.

Related Story:  CipherTrace Q3 2019 Cryptocurrency Anti-Money Laundering Report Takeaways

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