CipherTrace: $1.4B In Crypto Stolen So Far In 2020

2020 may become a record breaking year for crypto criminals, who have already amassed around $1.4 billion in the first five months of the year, research from CipherTrace revealed on 2 June.

According to the report, the crypto funds lost to bad actors in the first five months of 2020 already amount to $1.36 billion, and though that number is far off from the $4.5 billion lost in 2019, it does indicate 2020 is on track to becoming the second-costliest year in the industry. The report also showed that the biggest criminal threat so far has been fraud and misappropriation, which accounted for 98% ($1.3 billion) of all the stolen crypto this year.

CipherTrace has noted that crypto criminals have started capitalizing on the COVID-19 pandemic, with the firm identifying multiple scams involving e-mail campaigns that impersonate coronavirus related groups. In order to steal personal information and cryptocurrency, criminals have already imitated entities such as the World Health Organization, the Red Cross and the Center for Disease Control.

The firm also found that criminals have started using “COVID-related” applications, such as sites and virus trackers for smartphones, to install ransomware and then demand payment in cryptocurrency to decrypt user files.

With that said, the largest crypto loss this year comes from a Chinese multi-level-marketing scheme, called Wotoken, which came to light last month. According to the report, the scam promised investors unrealistic returns using a non-existent algorithmic trading software, and with that was able to steal around $1.09 billion from 715,000 investors.

Though the scheme’s alleged perpetrators are now on trial in China, its ill-gotten funds are still on the move. The funds in question, according to CipherTrace, are 46,000 Bitcoin (BTC), 2.04 million Ethereum (ETH), 292,000 Litecoin (LTC), 56,000 Bitcoin Cash (BCH), and 684,000 EOS (EOS).

The report further noted that crypto criminals are finding it harder to offload their illicit funds directly on exchanges, suggesting that the evolving Anti Money Laundering (AML) measures have proven their effectiveness. The firm’s research found that in 2019, the global average of illicit funds received by exchanges had dropped by 47%.

Though it may be harder for criminals to offload their cryptocurrency on exchanges, their evolving obfuscatory tactics still make it possible, and exchanges may still inadvertently launder criminal funds. CipherTrace monitored darknet wallets that send crypto to exchanges for a week, and found that while 9.8% of transfers went directly to exchanges, over 30% took additional steps to mask the cryptocurrency’s source.

The firm also pointed out that there is a need for establishing global AML and counter-terrorism standards, seeing as 74% of the exchange-to-exchange Bitcoin transfers in 2019 were cross-border.