According to a report released by CipherTrace on May 1, 2019, the losses related to cryptocurrency thefts and frauds have climbed over $1.2 billion in the first quarter of the year.
Losses Are Estimated to Be Much Higher
Despite the crypto and blockchain industry decelerating as compared to 2018, the scams and thefts haven’t stalled. CipherTrace released a report mentioning that the amount lost to cryptocurrency thefts, frauds, and scams in the first quarter of 2019 equaled $1.2 billion.
This is 70 percent of the total amount lost to such activities in the whole of 2018, which was $1.7 billion.
Cryptocurrency scams and the theft of crypto exchanges resulted in a loss of $356 million. The New York Attorney General’s Office declared the Bitfinex fraud responsible for the numbers being this high as the misappropriated funds summed to a whopping $851 million.
QuadrigaX’s founder’s sudden death left approximately $134 million frozen in user accounts as he was the only person with the password to gain access.
The report also stated that the data is an assumption of what was visible and it was highly likely that the real amount lost to thefts and scams was much greater.
In an interview with Reuters, CEO of CipherTrace, Dave Jevans, told that crypto crime is on the hike because regulations are still weakly enforced. “Europe,” he specified, “has not implemented its regulations yet and the cybercriminal community continues to grow.”
He also pointed at companies’ inside issues contributing to the frauds and thefts. Operating outside the U.S., where crypto regulations aren’t as firm, make companies more submissive to fraudulent behavior. “Greed and mismanagement by young management teams at these cryptocurrency companies managing hundreds of millions” make matters worse according to the report.
2018 in Cryptocurrency Thefts
Reuters reported January 29, 2019, that cryptocurrency scams and thefts increased by 400 percent from 2017 to 2018, amounting to $1.7 billion. $950 million of the above total were stolen from cryptocurrency exchanges and crypto wallets alone. Korea and Japan were the hubs of theft from crypto exchanges, making up 58 percent.
Authorities are continuously making efforts to cork such activities. However, to drag down these numbers, the companies and individuals need to be well aware of the risks involved and take measures to recognize the pitfalls.