Cryptocurrency theft via the hacking of crypto trading platforms has resulted in $927 million being stolen in the first nine months of 2018, according to a report released on Wednesday by US-based cyber security company CipherTrace.
The amount is almost 250% larger than in 2017, when $266 million was siphoned off from crypto exchanges, as per a previous report by CipherTrace. However, 2018 has seen some massive hacks amid the increasing prominence of cryptocurrencies and the emergence of new digital tokens. Among the biggest attacks were those on Bithumb, Coincheck, Bancor, and, more recently, Japanese exchange Zaif.
Speaking to Reuters, CipherTrace CEO Dave Jevans observed:
“The regulators are still a couple of years behind because there are only a few countries that have really applied strong anti-money laundering laws.”
Jevans, who also serves as chairman of the Anti-Phishing Working Group, added there were likely to be 50% more criminal transactions than included in the report, with CipherTrace aware of over $60 million in stolen cryptocurrency going unreported.
The study, which focused on instances of money laundering and other criminal activity in relation to the crypto market, revealed that 97% of all direct criminal BTC payments are pointed towards unregulated crypto exchanges, and the amount of criminal Bitcoin received by exchanges is 36 times larger in countries where anti-money laundering (AML) regulation is weak.
“These results indicate that money laundering activity using cryptocurrencies is directly correlated to AML regulations and their enforcement on exchanges,” the report stated.
Additional findings show that since 2009, high-profile crypto exchanges from countries with poor AML enforcement have served to launder around 380,000 BTC, equivalent to roughly $2.5 billion. The report said it had studied the top 20 crypto exchanges by volume but did not provide any names. In addition, these exchanges were also used to buy 236,979 BTC (roughly $1.5 billion) worth of criminal services.
“All exchanges get these money-laundered funds. You really can’t stop them. And here’s the reason why. We learn about the criminal stuff often times after it actually happened. So there’s no way to know in real time. You can know 80-90 percent of the time, but it’s impossible to know 100 percent,”Jevans said.
The CipherTrace report also observed that while new crypto crime threats loom on the horizon (such as SIM swapping and targeted mass cyber extortion), instances of laundering cryptocurrencies may be greatly reduced during the coming two years if AML regulations are enforced worldwide.