According to a new report submitted by Cipher Trace, the cryptocurrency world is plagued with hacks and thievery, resulting in nearly $4.5 billion in stolen digital funds in 2019.
Cipher Trace: The World of Thievery Is Growing
This is slated to be the biggest year for cyberthieves yet, beating out 2018 by several billion dollars. It also seems that over time, thievery in the crypto world has become far more prominent, meaning that even though we’re doing everything we can to advance security measures and boost safety within the industry, we’re simply not doing enough, or our methods are questionable.
Up Bit, for example, is the latest cryptocurrency exchange to fall victim to a cyberattack. The platform – which is stationed in South Korea – has ultimately lost nearly $50 million in ether tokens, though the company has explained that the money lost was stored away in hot wallets. It’s hard to understand why so many exchanges and trading platforms still see hot wallets as valid methods of storage considering they’re not very safe when compared with cold wallets.
Hot wallets were being utilized by Coincheck in January of 2018. Coincheck played host to the largest digital currency theft in history, losing more than half-a-billion in assorted cryptocurrency funds over the course of just a few hours. Again, the money lost was stored in hot wallets. This is not a form of technology that a cryptocurrency exchange storing billions of dollars in crypto can afford to utilize. If your company is that big, cold storage is the best and only answer.
The report by Cipher Trace suggests that the amount stolen in 2018 came to only $1.7 billion. Thus, 2019 has seen a surge in thievery of approximately 150 percent. Dave Jevans, the chief executive officer of Cipher Trace, explained in a statement:
The 150 percent increase in crypto theft and fraud reflects how criminals are adapting for bigger and better scores. Criminals chase money and the money is right here and ripe for the taking. Little attacks are often easy to defend against, but targeted attacks are far more lucrative.
Two large thefts account for the massive surge in the percentage. The first was a multi-billion-dollar Ponzi scheme that occurred at the hands of the crypto exchange and wallet system Plus Token. The second is the $195 million loss which occurred through Quadriga CX, the now notorious and ill-fated Canadian exchange that’s trapped in a class-action suit.
Thieves Are Learning and Adapting
Even without the two biggest thefts and scams, we are still witnessing many multi-million-dollar crimes. There is a relatively consistent increase in criminal activity year over year, and we don’t expect that to change overnight… Today’s attackers are patient and willing to spend more time waiting for a payout… Those responsible are acting carefully, only cashing out small amounts to stay under the radar.