Cybercriminals no longer have to hide in the shadows, they now have their own digital currency haven. Cryptocurrency has become a thriving hub for malicious activity, providing criminals with an anonymous and untraceable way of profiting from illegal activities.
With the lucrative potential of digital assets, cybercriminals have increasingly been taking advantage by entrapping victims in get-rich schemes that are actually Ponzi scams. Let’s dive in and take a look at such Ponzi scams to understand what is happening in this space:
Cryptocurrency: A New Engine for Cybercriminals
Cryptocurrency can be seen as an ideal escape vehicle for hackers, providing them with lots of liberty and anonymity when performing their illegal activities. There is no oversight in crypto, no real intermediary authorities i.e. governments or banks, making it easy for cybercriminals to conduct cybercrimes. Recently, two Estonian citizens were arrested for their involvement in a massive $575 million cryptocurrency fraud. In addition, U.S. authorities also secured guilty pleas from the EmpiresX “Head Trader,” who was connected to $100 million fraud from investors through various global cryptocurrency scams. This is yet another example of how cybercriminals are always looking for that next opportunity. However, cyber threats don’t end here, there are institutional risks too.
Amidst the hustle and bustle of modern-day trading, it’s easy to forget that exchanges and platforms may not be as stable as they appear. Unfortunately, there are risks for institutions that could potentially lead them astray due to inadequate customer deposits in their system, this can have catastrophic consequences if gone unchecked.
The cryptocurrency world was caught by surprise by the sudden collapse of FTX, which sent shockwaves through an already shaky space. With debt totalling to $3 billion owed to its 50 biggest creditors, it is no surprise that this devastating failure generated ripples across the industry and deepened what had become known as “the crypto winter.” The true cost of FTX’s demise in terms of impact on other companies remains untold.
Despite FTX collapsing, Cryptocurrency theft is a booming business, with the UK experiencing an alarming leap in such criminal activity. A staggering £226 million ($273 million) was stolen from victims between October 2021 and September 2022, that’s 32% higher than the previous year. According to police data analyzed by Financial Times, 10,030 cases were reported, marking a 16% rise since then.
Steps Taken by Governments to Suppress Crypto Crimes
In order to combat the growing threat of cybercrimes involving cryptocurrencies, governments around the world have taken significant steps. These include reinforcing existing regulations, introducing new initiatives, and fostering international collaboration in addressing this criminal activity. Together these efforts are helping create a safer global financial system for everyone involved with digital assets. Some of these efforts include:
Russia and Turkey Collaboration
The Turkish Minister of Justice, Bekir Bozdag, and The Prosecutor General of the Russian Federation, Igor Krasnov have recently reached a collaboration agreement where they plan to combine efforts to fight against cyber criminals involving the use of crypto for illegal purposes.
In an effort to combat the escalating sanctions imposed by Western nations on Russia for its invasion of Ukraine, Moscow has been exploring new ways to bypass these limitations and enable cross-border trade. The Russian Mir cards were largely restricted due to the U.S.-led pressure, but a few Turkish banks still accepted them until recently, suspending their operations with it as well.
However, Turkey’s President Erdogan suggested a unique payment system between the two countries that would serve as a creative alternative to ensure timely international payments, despite any geopolitical risks or economic restrictions they may face.
Tracking of Crypto Criminals by Former IRS Agents at Binance
Two former agents at Binance, namely Price and Tigran Gambaryan, are tracking con artists, aiming to reduce the number of crypto crimes in the country. Price, as an agent at IRS, conducted investigations on Helix, a bitcoin tumbler linked to dark web trades.
In his investigation, he discovered a series of tiny transactions that appeared to be the administrator charging a fee for each transaction he performed. At a later stage, Helix’s CEO pled guilty as it was later discovered that Helix processed more than $310 million in crypto.
Gambaryan also played a part in discovering criminals on his quest for a (crypto) crime-free country. His famous investigations include the MT. Gox hack 2014, in which users lost around $350 million altogether. It is worth mentioning that he also played a huge role in the crime of the BTC-exchange.
Between its establishment in 2011 and its collapse in 2017, the BTC-e crypto exchange is reported to have handled over $9 billion in Bitcoin transactions. During those six years, Vinnik, the founder of BTC-e, was suspected of laundering 300,000 Bitcoin (about $4 billion).
The Bottom Line is…
Online activities are accompanied by risk, and it’s no secret that cybercriminals have turned to cryptocurrency as their preferred method of payment. Thousands of traders have been victims of crypto scams. Already, more than 46,000 people have claimed that they have lost around $1 billion since 2021. One might ask, where is this going to next?
As cryptocurrencies become increasingly popular as a method of payment, organizations must take measures to ensure their security systems are up-to-date and safe enough to protect their funds from cyber theft. Fortunately, there are organizations out there who can help victims of cybercrime reclaim their lost assets. Cyberclaims, for example, provides tracing reports that allow victims to locate and freeze their stolen cryptocurrency.
By remaining vigilant and taking steps to protect yourself online, you can reduce the risk of becoming a victim of cyber fraud. Be sure to research any exchanges and traders you work with, be aware of potential scams, and use two-factor authentication whenever possible.
Most importantly, remember that even with increased security measures in place, there is always someone smarter on the other side looking for an opportunity to take advantage of you. So, always check, check and double-check before engaging in any trades.