The Alarming Rise in Crypto Hack Losses
In the world of digital currency, 2018 has proven to be quite a roller coaster—one that veered straight off the tracks. In just the first nine months of this year, losses from cryptocurrency exchange hacks hit a staggering $927 million, according to a report by CipherTrace. This figure is a shocking 250% increase compared to the entire year of 2017, where losses amounted to $266 million.
The Smaller Slices of the Pie
It’s not just the jaw-dropping heists grabbing headlines. Smaller thefts ranging between $20 to $60 million are also on the rise, contributing an added $173 million in the third quarter alone. Looks like the crypto-robbers are getting their entrepreneurial spirit on!
Unpacking the CipherTrace Report
CipherTrace’s Crypto Anti-Money-Laundering (AML) report highlights some distressing trends. CEO Dave Jevans, who wears multiple hats in the anti-cybercrime space, believes that the actual losses are likely about 50% higher than reported. His team has their eyes on over $60 million that slipped through the cracks, remaining unreported. Talk about an invisible heist!
Weak Regulations: The Criminal’s Playground
The primary culprits behind these thefts? Our not-so-friendly neighborhood exchanges, some of which operate in countries with weak AML regulations. Jevans stated that since 2009, approximately $2.5 billion has been laundered using Bitcoin. Now that’s a serious injection of digital dollars into the black market!
The Reality of Tracking Crypto Crimes
Despite their best efforts, CipherTrace estimates that they have only been able to track about 80-90% of these crimes in real-time—an alarming statistic for regulators and crypto enthusiasts alike. Jevans confessed that it’s nearly impossible to tag 100%, leaving gaping loopholes for cybercriminals.
The Costly Coincheck Heist
2018 kicked off with the catastrophic $532 million hack of Coincheck, which accounted for over half of the reported losses for the year. If that’s not a wake-up call, I don’t know what is. Meanwhile, Zaif, another unfortunate Japanese exchange, recently announced its financial support plan for customers affected by a $59.7 million theft in September. At least someone is trying to patch up the wounds.
The Call for Stronger Regulation
As the crypto landscape continues to evolve, the need for robust regulatory frameworks is more pressing than ever. Juggling the fine line between innovation and safety is challenging, but as highlighted by these staggering figures, it’s a challenge we can no longer ignore. Regulators, take note—don’t wait until the next big heist to tighten the reins!
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