Cryptocurrency scams were a hot topic in 2018, courtesy money-grabbing ICOs, Twitter impersonations, and ever outright disappearances.
But a prominent research firm believes scammer efforts have not toned down, even as the broader crypto market is less popular than two years ago.
2020 might set another record
CipherTrace, a Californian firm famous for its intelligence on the cryptocurrency and blockchain market, said Tuesday that crypto scams are well and alive. The firm noted 75 percent of all Bitcoin payments were cross-border, which in turn, creates “urgency” for compliance solutions for digital assets.
As stated on its “Spring 2020 Cryptocurrency AML and Crime Report,” over $1.4 billion were either stolen or hacked in the first five months of 2020. If scammers continue this trend, the figure can cross $3 billion by December 2020.
In case that happens, 2020 could record the second-highest value in crypto-related crimes, just below 2018’s $4.5 billion.
Scammers have capitalized on the ongoing coronavirus narrative, conducting fraud under the guide of donations or health charities. Victims are lured to online chatrooms for a sense of legitimacy, and payments in Bitcoin are requested soon after.
Fake Covid-19 PPE Products Don’t Sell On Dark Net Markets https://t.co/DwaSah5KDO Cryptocurrencies, to be sure, are cleaner than the reputation which precedes them. less than 0.2% of the funds accepted by exchanges is directly from criminal sources #darkmarket #bitcoin #AML
— CipherTrace (@ciphertrace) June 2, 2020
On examining a “prominent darknet marketplace,” CipherTrace noted over 9.8 percent of all “one-hop interactions” went directly to cryptocurrency exchanges, which increased the risk exposure for the latter.
China’s Wotoken the most criminal
CipherTrace noted Wotoken, a now-infamous crypto Ponzi scheme originating in China, contributed to most criminal funds.
The project, while it existed, promising using algorithmic trading methods to payout investors a multiple of their initial capital.
But instead of the millions promised, investors were fleeced and left with nothing. The firm stole over $1 billion from an estimated 715,000 people — with one major operator being part of the PlusToken Ponzi scam.
WOW another mega-size crypto Ponzi WOTOKEN just second to PlusToken gets clamped down by Chinese police and by reading the court ruling material here are some eyes whopping data
active July 2018 to October 2019, WoToken scammed total over **1 BILLION USD**
— Dovey 以德服人 Wan ?? (@DoveyWan) May 16, 2020
Meanwhile, exchanges in Finland came out on top as a criminals’ favorite, for three years running. Over 12 percent of all stolen Bitcoin went to such bourses, with LocalBitcoins receiving a staggering 99 percent of all such funds.
Only 0.17 percent of all funds received by crypto-exchanged seemed to originate from a criminal source. This can be attributed to strict AML and KYC structures invoked by almost all tier-one and tier-two exchanges in the world.
On a positive note, the global average of direct criminal funds recorded at exchanges dropped over 47 percent in 2019. CipherTrace adds:
“This suggests that many criminals are finding it harder to offload their illicit funds directly to cryptocurrency exchanges, indicating effective implementation of AML measures around the world.”
However, criminals seem to be “getting savvier” in obfuscating the origins of their stolen funds prior, concluded CipherTrace.