95% of payments to criminals made from unregulated exchanges

Oct 10, 2018 17:47 GMT  ·  By  ·  Comment  · 

CiperTrace reports that hackers have stolen $927 million worth of cryptocurrency in the first three quarters of 2018, while around 97 percent of all payments to and from criminals have been made using unregulated cryptocurrency exchanges.

The most notable incidents that lead to large amounts of cryptocurrency being stolen were the breaches of the Coincheck exchange with a whopping $530 million and BitGrail with $195 million.

Because of the substantial cryptocurrency heists that occurred in 2018, the volume of stolen cryptocurrency was 3.5 times larger than the one of 2017, with an apparent climbing trend for the last quarter of 2018 which means that cybercriminals will siphon at least $1 billion until the end of the year.

"The study defined ‘criminal sources’ as dark market site, extortion, malware, mixer/tumbler/money laundering site, ransomware, and terrorist financing that CipherTrace has been able to identify and validate as of 9/29/2018," according to the CipherTrace report (.PDF).

The report also says that most regulators have begun to prioritize Anti-Money Laundering (AML) efforts around the globe in an attempt to protect citizens from scams and theft, as well as to cut cryptocurrency-based financial resources used by terrorist groups.

The total volume of cryptocurrency from criminal sources exchanging hands reached $2.5 billion since 2009

European Commission’s 5th Anti-Money Laundering Directive (AMLD 5) is one such example, a regulation that EU members will have to transpose into state laws until January 20, 2020.

"The analysis also identified 380,155 bitcoins that were received by cryptocurrency exchanges directly from criminal sources between January 9, 2009 and September 20, 2018," states ChiperTrace in its analysis. "In other words, 36 times more criminal bitcoin was received by crypto exchanges in countries where AML is either lax or lacking."

The 380,155 bitcoins coming from criminal sources identified by CipherTrace are worth $2.5 billion, a considerable amount of funding that can be used for any purpose in the absence of state regulation.

As Anti-Money Laundering regulations are put into place to fight criminal fund exchanges, bad actors also invented new types of cryptocurrency crime threats including SIM swapping, targeted mass cyber extortion, as well as advanced cyber attacks on exchange personnel.

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