Could 2020 Record The Second Highest Value in Crypto-Related Crimes?


CipherTrace Research has released its Spring 2020 Cryptocurrency Anti-Money Laundering and Crime report. According to the report, 2020 recorded crypto hacks, thefts, and frauds totalling to $1.36 billion in the first five months. These numbers, it seems, are aggravated with the ongoing global pandemic, COVID-19. 

In 2019, hackers made away with $4.3 billion from crypto-related crimes. This figure saw the year record the highest value of cryptocurrency crimes. It now seems that 2020 may well be on its way to recording the second-highest value all-time, thanks to some figures that were recently released.

Details of the Crime Report

Fraud and misappropriation of funds have been the biggest culprits when it comes to cryptocurrency crimes. This trend continues this year, with 98% of the $1.36 billion stemming from fraud and misappropriation. The Ponzi Scheme by Wotoken in China is the most significant contributor, accounting for $1 billion worth of stolen crypto. 

According to the report, there is a need for exchanges to enforce stricter AML and Counter-Terrorism Financing (CTF) regulations. The recommendations come in light of the increase of cross-border transactions, which account for 74% of the bitcoin moved between exchanges. 

The report also found that only 0.17% of the funds in exchange transactions in 2019 came from criminal sources. The figure was a 47% drop in 2019 and is attributed to the increase in the crypto AML regulations globally. However, the rise in AML regulations has only fueled criminals and hackers to get innovative and find other ways to obfuscate their stolen funds. 

CoronaVirus-Related Crimes

The global pandemic has created a loophole for hackers and other criminals to siphon funds. It is no surprise that coronavirus-inspired fraud has been quite widespread. Recently, regulatory enforcement has slacked off, owing to the need for governments and other organizations to channel a large number of resources to wade off the economic and health impacts of the disease. 

Hackers are now impersonating legitimate organizations such as The Red Cross to extract information or crypto payments. Another popular scam is the sale of diagnostic tests, PPEs, and other in-demand supplies, especially in the darknet markets. Scammers are also using COVID-19 phishing attacks, with popular email scams such as WHO email and CDC email scams. These, together with other email campaigns, help scammers acquire personal information as well as crypto payments. 

Bitcoin ATMs

According to the report, bitcoin ATMs may be the next primary regulatory target. The report found that in 2019, BATM users sent more funds to high-risk exchanges that are known for money-laundering and financing of criminal activities. 

Although most of these exchanges aren’t illegal, the percentage of funds to these exchanges from BATMs has been doubling since 2017, which raises several questions. 

Are KYC Checks the Answer?

The report concludes with a review of the exchanges. CipherTrace Research reports that 44% of the exchanges have robust KYC check processes. These exchanges require more than just an ID for verification. Users have to provide proof of address, as well as complete a phone call or video chat verification. 

Seeing as AML regulations have been useful, CipherTrace Research recommends that more countries enforce regulatory measures to help curb crypto-related crimes. 

Wayne Jones
Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, I cover trendy issues on digital currencies.

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