August 12, 2019updated 16 Aug 2019 3:36pm

With the Bitcoin price up, cryptocurrency thefts could total $4.3bn in 2019

By Luke Christou

Bitcoin is holding strong above $10,000 after a difficult year saw the leading cryptocurrency fall to a low of $3,000. While that’s great news for crypto investors, those holding their funds in online cryptocurrency exchanges should be wary – as prices go up, so does the likelihood of costly exchange hacks and exit scams.

Crypto security company CipherTrace has released its Q2 2019 Cryptocurrency Anti-Money Laundering (AML) Report, which provides insight into the cryptocurrency thefts, scams and fraud taking place around the world.

Cybercriminals stole $125m in cryptocurrency assets from exchanges during the second quarter.  That is a drop of almost 90% from Q1, in which the company estimated losses at $1.2bn.

However, rather than improved security, CipherTrace believes this improvement is likely due to the poor performance of crypto assets during March and April. The $125m estimate is based on the value of the assets when they were stolen, rather than current prices, so the value of much of the stolen assets would now be now far greater.

If prices remain as they are, the company believes an additional $3bn could be lost over the remaining half of the year, with the total reaching $4.3bn – an increase of 150%, or $2.6bn year-over-year.

Despite the increasingly large amounts of money being held in cryptocurrency exchanges, many of them are frequently found to be lacking the security needed to keep their customers’ assets safe, particularly when up against increasingly sophisticated attackers.

In May, Binance, one of the world’s largest cryptocurrency exchanges, suffered a breach resulting in the theft of $44m worth of Bitcoin. The attackers were found to have used a string of different techniques, such as phishing and malware, to gain access to the exchange’s systems.

2019: An increase in exit scams?

As well as exchange breaches, crypto’s revival could lead to an increase in exit scams, where those in possession of a large sum of cryptocurrencies disappear, taking their customers’ assets with them.

Two incidents of this nature are currently under investigation. One of these involves QuadrigaCX, formerly Canada’s largest crypto exchange. Following the death of the exchange’s founder, QuadrigaCX’s cold wallet, which should have contained as much as $200m in cryptocurrencies, was found to have been emptied.

Those behind South Korean exchange PlusToken are also being investigated for a possible exit scam that may have resulted in as much as $2.9bn in lost funds.

Some $11m worth of cryptocurrencies was seized by European authorities following an attempted exit scam carried out by the creators of dark web marketplace Wall Street Markets during Q2.


Read more: What happens to the Bitcoin price following crypto exchange hacks?


 

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