Just under $1.4bn was stolen through various crypto-related scams in the first five months of 2020, according to a report from cyber security firm CipherTrace
The figures suggest that 2020 could be the second most costly year ever in terms of crypto scams, however it may well be far less than the $4.5m of losses suffered in 2019 due in part to the introduction of more regulation.
Furthermore, the vast majority of the $1.36 billion losses can be attributed to one particular scam – a Ponzi scheme based in China called Wotoken that promised exorbitant returns via non-existent algorithmic trading strategies which netted one rogue operator almost $1bn in crypto assets from over 715,000 victims.
The report also showed that there has been a dramatic 47% decrease in the illicit funds received by crypto-exchanges with just 0.17% of funds traced directly to criminal sources. “This suggests that many criminals are finding it harder to offload their illicit funds directly into cryptocurrency exchanges, indicating effective implementation of AML measures around the world,” states the report.
However it also adds that criminals seem to be getting better at obfuscating the origins of their stolen funds prior to cashing out on exchanges. “CipherTrace’s examination of one prominent darknet marketplace revealed that risk exposure to exchanges tripled for secondary transactions (two-hops out) compared to primary transactions (one-hop out),” states the report.
Another noticeable trend was the propensity for fraud within Finland. Crypto-exchanges in Finland topped the charts for the third year running with 12% of all bitcoin funds coming directly from a criminal source. In second place was Russia at 5.23% followed by the UK.
The report also notes that 74% of the bitcoin involved in exchange to exchange transactions was sent cross-border which underlines the importance of establishing global AML standards.
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