By In its quarterly Cryptocurrency Anti-Money Laundering Report, CipherTrace reported that almost $1 billion has been stolen or crypto hacked so far this year.
CipherTrace, which was founded in 2015 by David Jevans, develops cryptocurrency Anti-Money Laundering, bitcoin forensics, and blockchain threat intelligence solutions. CipherTrace and its quarterly reports have become an authoritative data source which the industry continues to rely on.
According to CipherTrace’s most recent report, approximately $927 million was stolen by hackers from cryptocurrency exchanges and other platforms during the first 9 months of 2018 alone. CipherTrace estimates that this number will reach over $1 billion by the end of the year. The thefts that occurred during 2018 are reported to be as much as 3.5 times higher than the thefts of 2017, which totaled approximately $266 million.
2018’s Major Hacks
With the year-to-date cryptocurrency thefts continuing to set records it is unsurprising that there were several major hacks during 2018, most notably of which was the theft of $530 million worth of tokens stolen in Japan from the exchange Coincheck. Italy also saw a massive breach of the crypto exchange BitGrail which saw $195 million worth of tokens stolen. Other exchanges around the world saw similar thefts including Zaif in Japan which was robbed of $60 million and Coinrail and Bithumb in South Korea which were robbed of over $40 million and $30 million respectively.
In addition to the headline-making major hacks, CipherTrace reported that there was “over $60 million in cryptocurrency that was stolen but not reported publicly”. Current data is also indicating, according to CipherTrace, that the number of cryptocurrency thefts is steadily growing. Several smaller heists in the $20-$60 million range occurred during the year totaling $166 million.
Anti-Money Laundering Threat Protection
According to CipherTrace “criminals will need to quickly launder these stolen tokens before stronger cryptocurrency anti-money laundering controls are deployed globally over the next 18 months”. The most prominent means of direct criminal bitcoin payments, approximately 97%, are through unregulated exchanges. Furthermore, a reported 36 times more criminal bitcoin is received by cryptocurrency exchanges in countries where Anti-Money Laundering (AML) measures are either weak or not enforced. These top exchanges are reported to have had approximately 380,155 bitcoins, which equates to approximately $2.5 billion at today’s prices, laundered through them by identifiable criminal sources from January 2009 to September 2018.
Although new cryptocurrency crime threats, such as highly targeted mass cyber extortion, SIM swapping, and advanced cyberattacks on exchange personnel are seen to be emerging. Governments around the world are responding to the increased threat with stricter AML regulations and measures which are being introduced to reduce the risk of theft.
One such example is the Financial Services Agency (FSA), Japan’s so-called financial watchdog who conducted several investigations of cryptocurrency exchanges within Japan. In March 2018 the FSA issued a business improvement order to Tech Bureau, the operator of the exchange Zaif which lost $60 million this year, to improve security and anti-money laundering measures.
With the international community committed to the fight against money laundering and the financing of terrorism, it is unsurprising that several countries including Bermuda, Malta, Canada, Mexico, South Korea, North Korea, Saudi Arabia and the United States are improving regulatory measures to combat digital asset theft. According to CipherTrace “opportunities to launder cryptocurrencies will be greatly reduced throughout 2019 and 2020 if cryptocurrency AML regulations are successfully enacted and enforced globally”.
What is your reaction to the news that almost $1 billion has been stolen through crypto hacks? Do you believe better regulatory measures can solve this problem? Give us your thoughts in the comments below.
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