Latest report shows crypto criminals are gaining from scams

Chris Lee

A major quarterly report from an organisation dedicated to tackling problems related to cryptocurrencies has revealed a sharp rise in the amount of crypto crime.
 
According to CipherTrace, a security firm based in California, it’s now the case that crypto fraudsters will take more than $4.3 billion US dollars from unwitting consumers over the course of 2019.
 
In the latest version of the Anti-Money Laundering report which it releases every quarter, crypto losses as a result of theft and fraud will far surpass those accrued in 2018.
 
In 2018, the total was $1.1 billion US dollars – meaning that this metric has risen significantly over the course of just 12 months.
 
The reasons for the rise are varied, and the authors of the report appeared unwilling to draw firm conclusions about what could be behind the changes.
 
However, exit scams were mentioned as one possibility. The term “exit scam” refers to crypto fraud cases in which people realise that they cannot access their deposits and purposed profits.
 
It is also believed that a lack of appropriate regulation and correct security conditions for traders was part of the problem.
 
While the headline figures certainly make for tough reading for those who value their safety and security while trading crypto, it’s also possible that they may be even higher.
 
The report’s authors attribute this in part to the fact that the exchange value of many of the major coins in question, such as Bitcoin, have gone up in price since the report was first written.
 
It is also believed that cryptocurrency fraud is under-reported generally, perhaps as a consequence of people feeling unwilling to report such crimes due to embarrassment.
 
“These numbers reflect only the losses that CipherTrace has validated; undoubtedly more losses occurred during the quarter”, CipherTrace explained.
 
A perceived rise in the frequency of Ponzi schemes has also been named as a possible cause.
 
One such scheme mentioned in the report from CipherTrace, called PlusToken, was described as a major drain on crypto funds.
 
It is believed that this scheme alone was responsible for possible losses of almost $3 billion in cryptocurrency value.
 
In the executive summary of the report, which is published on the CipherTrace website, the authors said that pre-existing trends “continued or accelerated” over the course of the quarter.
 
“Outright thefts as well as scams and other misappropriation of funds from cryptocurrency users and exchanges continued apace, netting criminals and fraudsters approximately $4.3 billion in aggregate for 2019”, they said.
 
“Insider thefts were by far the largest offenders, inflicting massive losses on investors and exchange users. 2019 could also turn out to be the year of the exit scam.
 
“On top of the QuadrigaCX disaster, which is updated in this report, one alleged Ponzi scheme in this quarter appears to have defrauded millions of users out of $2.9 billion in crypto assets.
 
“Other exit scams, such as Coinroom and Bitsane, are still under investigation and those losses are not included and this report’s total”, they added.


Chris Lee

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