Business & Finance

CipherTrace Publish Dossier on Cryptocurrency Laundering – Reports Crypto Theft on the Rise

CFTC safety guidelines come under the microscope to prevent crypto rip-offs

Cryptocurrencies are often now considered as a substitute to what we call as ‘material assets’, for example gold. It fulfills quite many criterion, it is storable, it is exchangable and it keeps investment intact in times of recession and inflation.

Another characteristic that it carries from gold is of theft. Gold can be stolen from a safety box or a vault, similarly, cryptocurrencies, too, are prone to theft. They are stored in digital currency exchanges, or simply put, wallets, which can be hacked. This has been very much the case of late, according to a report published by U.S based cybersecurity firm, CipherTrace, this week.

The CipherTrace Report

The report finds that theft of cryptocurrencies from exchanges have soared in the first half of this year to three times the magnitude seen for the whole of 2017. This counts as a three-fold increase in crypto associated money laundering, which comes as a cause of concern for investors, traders and regulators alike.

The report looks at the global anti-money laundering market which shows that in the first six months of the year, a total of $761 million were stolen from digital currency exchanges, compared to the minor $266 million for the whole of 2017. The most recent theft in 2018 was reported to be the loss of $32 million in digital currencies stolen from South Korean exchange Bithumb.

Source: CipherTrace dossier

Dave Jevans, CEO of CipherTrace and chairman of Anti-Phishing Working Group, admitted to being concerned in an interview:

Stolen cryptocurrencies are three times bigger this year than last year so the trend is obviously not our friend here.

He is worried and rightly so, because at current rate, it is expected that the losses could rise upto $1.5 billion, by the end of the year. This huge risk of theft has compelled CipherTrace to launch a software to help exchanges and hedge funds in the crypto industry in complying with anti-money laundering laws.

How criminals use cryptos in their capers

Criminals can use cryptos to hide their identities and launder money from ill-gotten gains since cryptos don’t have serial numbers like paper currencies. They are hence difficult to trade. It serves as a means of great ease for criminals; Why carry around a truck full of cash, while all you need is a computer?

This becomes a global cause of concern for the security authorities, who seem to have no control over the way stolen cryptocurrency is cleaned into globally wanted criminals. They are then able to hide their identity and gather resources to flee into other parts of the world to avoid arrest.

The CipherTrace report lists some known money laundering or fogging platforms in the crypto space.

  • BestMixer.io
  • Bitblender
  • Bitcloak
  • BitcoinFog
  • BitLaunder
  • BitMix.Biz
  • Chipmixer.com
  • Coinmixer
  • cryptomixer.io
  • DarkLaunder
  • Helix
  • Helix2
  • Helixlight
  • HelixMixer
  • Outlawtumbler
  • Penguinmixer
  • PrivCoin.io

Jevans also hinted for crypto-laundering to criminals as being a huge reason for the ever increasing crypto thefts while the U.S Secret Service is currently in process of reviewing private cryptocurrencies like Monero and Zcash for their potential usage in illicit purposes. Meanwhile Congress has also held multiple meetings on the risk of crypto being used for illegal purposes and some regulatory action is expected soon.

Safeguards from the CFTC

How do you protect yourself from the ever soaring crypto rip-offs? Well, the CFTC tried to address this in the form of a few safeguards.

  • If someone tries to sell you an investment in options or futures on virtual currencies, including Bitcoin, verify they are registered with the CFTC.
  • Remember, much of the virtual currency cash market operates through internet-based trading platforms and it may be unregulated and unsupervised.
  • Do not invest in products or strategies you do not understand. Only speculate with money you can afford to lose.
  • There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.
  • Investors should conduct extensive research into the legitimacy of virtual currency platforms and digital wallets before providing credit card information, wiring money, or offering sensitive personal information.
  • The SEC has also warned that some token sales or initial coin offerings (ICOs) can be used to improperly entice investors with promises of high returns.

Interesting advice, CFTC. Our readers certainly did not know this.

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Razi Khan

Researcher, Electrical Engineer and a teacher, Razi is one who takes great intrigue in the prospects of blockchain and cryptocurrencies (BTC in particular) while contributing a critical approach over the subject regularly. Email: razi@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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