Security

Crypto-currency exchange heists skyrocket

Crypto-currency owners make perfect victims.
Crypto-currency owners make perfect victims.

A record-breaking amount of crypto-currency, three times the level seen during the whole of 2017, has been stolen from online exchanges in the first half of 2018.

This was revealed by a study into online heists: the Ciphertrace 2018 Q2 Anti-Money Laundering Report.

The report, which examines the global anti-money laundering market, revealed that in the first half of this year, a whopping $761 million was stolen from digital currency exchanges, compared with approximately $266 million for the whole of last year.

Investors, speculators and criminals

According to Ciphertrace, the tremendous growth in the value of crypto-currencies over the last few years has attracted investors, speculators, and criminals.

"In the last two years alone, some of the best and brightest criminal minds made off with $1.21 billion in crypto-currency from exchanges."

The report also stated that the FBI has reported an almost six-fold increase in the value of virtual currency in complaints from 2015 to 2017. In addition, all the purloined funds are laundered by the thieves to disguise their true identities and help them avoid arrest.

The company said it has also seen an increase in terrorist financing and nation-state actors as well as a continued use of crypto-currencies, Bitcoin in particular, for payment of illegal goods, including drugs and weapons.

Criminals are often early adopters of new technologies, says Ciphertrace, adding that it is unsurprising that Bitcoin and other virtual currencies attracted their interest because these transactions do not require criminals to use their real names, bank account numbers, and suchlike, which helps them evade law enforcement. "Thieves can raid crypto-currency exchanges with little fear of being caught."

Attracting regulators' attention

However, the use of crypto-currencies for nefarious purposes is also attracting the attention of regulators, says Ciphertrace.

Government agencies across the globe are worried not only about the impact that theft and extortion has on individuals and business, but also how money laundering is growing as a result.

Once crypto-currency is stolen, gained as ransom or acquired through some other illegal means, the crooks have to get it into the blockchain, somehow cleanse it, and then take it out again to be used in the real world.

Perfect victims

Ilia Kolochenko, CEO and founder of Web security company High-Tech Bridge, says cyber criminals go where the easy money is, and many crypto-currency owners make ideal victims.

"They are virtually unable to protect either themselves or their digital assets, being susceptible even to relatively simple phishing attacks. Law enforcement is frequently uninterested in investigating and prosecuting petty offences with digital coins theft, as they are already under water with highly sophisticated nationwide hacks."

At the same time, Kolochenko says crypto start-ups are not well versed in even the fundamentals of cyber security, focusing all their efforts and resources on surviving in an extremely volatile and highly competitive market.

"Therefore, we can almost certainly expect a proliferation of security incidents related to crypto- currencies. Attackers have now established impressive infrastructure purposely tailored for large-scale theft and scams with digital coins," he adds.

Kolochenko advises those who own crypto-currency to remain extremely vigilant, and keep their devices and installed software up to date. At the very minimum, he says they should install a free antivirus from a reputable vendor, use two-factor authentication and unique passwords, and never entrust their wallets to any third parties unless they can trust them 100%.

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