Recent digital exchanges have failed to process cryptocurrency transactions safely. Digital exchanges have not implemented any “Know-your-customer (KYC)” policies, and due to lack of regulatory practices,$1 Billion cryptocurrency is Stolen in 2018.

CipherTrace, Blockchain and other virtual currency forensic firms are startled by these unsettling claims.

Cybercrime Hackers

Bitcoin is claimed to be one of the most targeted currencies for cybercrime hackers. The entire amount of stolen Bitcoin money has been used more or less for illegal activities around the world. Anti-money laundering procedures for digital asset is very weak. Exchanges that failed to regulate illegal drug dealing funds; maintain detailed records over time; report suspicious or large transactions; and/or enforce KYC regulations must now administer stronger Anti-money laundering mechanics.

Most of the Bitcoin used for criminal activities comes from unregulated exchanges, with the largest amount of laundering in the world connected to Bitcoin being $2.5 Billion.

According to CipherTrace, the world’s top 20 exchange firms account for 45 million cryptocurrency transactions. Criminal transactions come from a dark market website or by means of extortion, ransomware, malware or terrorist financing.

Devasting 2018

$1 Billion cryptocurrencies are Stolen in 2018. In 2017 forensic authors found many crypto theft cases through exchanges. 2018 has been more devastating than 2017; more than $900 Million out of $1 Billion was reported stolen in first three quarters of 2018. Therefore, the first 9 months of this year have seen crypto cybercrime tripled from 2017.

CipherTrace has uncovered that among these cases the “CoinCheck Hack” is at the top with the digital money was stolen through this hack equaling half of the overall losses that have occurred to date. South Korean exchanges Bithumb($30 million) and Coinrail($40 million), as well as Japan Zaif($60 million), are among the major crypto hacks to have transpired.

Customized extortion (known as phishing), through email and other electronic means, to collect cryptocurrency-based ransoms, is the most commonly used method of crypto theft. Advanced malware and targeting employees of cryptocurrency exchanges directly are also among the commonly used methods for crypto cybercrime.

SIM swapping is a new method in which a victim’s phone number is transferred to the thief’s SIM card. By using another’s SIM number, the thief can change passwords and similarly, gain access to the victim’s accounts.

Regulatory Actions

$1 Billion cryptocurrencies are Stolen in 2018. Since the third quarter of this year, many regulatory actions have started being taken against crypto-hackers. AML 5 is one of them, passed by the European Commission on July 9, 2018. According to this, the digital currency platform should implement all AML and counter-terrorism funding(CTF) laws, which are already present in traditional financial institutions.

The Financial Action Task Force (FATF), wants to bring into effect all present monetary standards to virtual currencies by the end of June 2019. FATF mainly wants those countries to apply these standards which are listed as “rough states” or regions in its records; and they are Syria, Pakistan, Iran, Tunisia, and Yemen.

Malta and Canada have established many regulations like license requirements for ICOs and virtual currency exchanges, as well as for Blockchain businesses. Canada is making currency exchanges, money service business (MSBs). It is even creating new KYC rules designed specifically to cater to digital currencies and affiliated companies.

Highly strengthened regulatory policies and qualified KYC rules can significantly reduce crypto cybercrime.           


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