Crypto Scammers Bagged $4.3 Billion in Q2

In 2019, scam activity reignited, tracking the trends of growing Bitcoin (BTC) prices and more innovative altcoin projects that offered loopholes for exploits - or were scams themselves.

Exploits, scams and schemes netted $4.3 billion’s equivalent in the second quarter of 2019, shows research by Cipher Trace. Exploits in the crypto space remain very varied, calling on the vigilance of traders, investors and crypto enthusiasts.

The biggest scam in 2019 turned out to be a Ponzi scheme, known as Plus Token. The project, targeting mostly South Korean investors, opened a dedicated exchange, which then exit-scammed, taking away the equivalent of $2.9 billion.

Compared to this giant scheme targeting a wider audience outside the space of crypto enthusiasts, the hacks against Binance and BitPoint are relatively small. Binance lost the equivalent of $44 million in BTC, and the BitPoint theft netted around $30 million.

Exchanges remain the riskiest vector for attacks, as hackers find more sophisticated exploits, and manage to take over credentials and directly empty hot wallets in valid-looking requests. The other risks to traders involve illiquid exchanges, which close without a warning, as a form of exit scams. After the crash of QuadrigaCX in the first quarter of 2019, the next three months saw the Polish exchange Bitmarket close with a loss of $23 million’s equivalent in BTC, after the co-owner was found dead.

Some of the hacks have been ascribed to the Lazarus group of hackers, originating from North Korea, as the latest UN report revealed. Rough estimates see North Korea stealing about $2 billion’s equivalent in crypto assets for all the hacking activity in the past few years. The latest hacking report estimates the haul for Q2 at around $571 million’s eqivalent.

The other type of illegal activity includes dark markets, where BTC is still the most widely used asset. BTC is also in demand for ransomware. Dark web usage also involves coins like Dogecoin (DOGE), Monero (XMR), as well as Litecoin (LTC), Ethereum (ETH) and Bitcoin Cash (BCH). BTC was also demanded as a ransom for the recent Binance KYC leak.

In the second quarter of 2019, Cipher Trace also notes that regulatory scrutiny has increased, based on the attempted oversight and discussions surrounding Facebook’s Libra.

Reading now