In 2018 criminals appropriated approximately $1 billion dollars worth of cryptocurrency. However, “illicit transactions comprised less than 1% of all economic bitcoin activity in 2018, down from 7% in 2012“. If the researchers were to consider the entire crypto market, not just bitcoin, than percentage-wise, the contrast would had been even greater. The vast majority of crime profit came through the hacking of crypto exchanges. An average exploit traced by the Chainalysis was worth $90 million.
Crypto Criminals Hit Ethereum Hard
Somewhat surprisingly, Ethereum scams constituted only $36 million. Ethereum scams are being categorized into three major categories:
- Phishing Scams
- Ponzi Schemes
- ICO Exits
In 2018 twice as much revenue was earned by the scammers and about fours times as many people were scammed.
The fact that according to the report, less than $10 million dollars were lost by the investing public through ICO exit scams is a bit perplexing. We believe in reality this number to be much higher. This can only be explained by the incompleteness of data available to the researchers and the definition ambiguity in what constitutes an “ICO exit”.
Although “phishing scams” is the largest item on the menu, the efficiency of this crime had significantly diminished in 2018 versus 2017. – “the median amount sent to a scam was around $94, far less than 2017’s median of $144. Furthermore, the median total revenue made by a scammer in 2017 was over $6,500, as opposed to $2,440 in 2018. In 2017, only 49 scams made less than $100, whereas in 2018, that number jumped to 181, of which 65 made less than $10”.
- Decentralization – the researchers believe that the criminals will move from “traditional” dark markets to encrypted messengers such as Signal, WhatsApp and Telegram. The latter is expected to introduce its “ton” cryptocurrency sometime in 2019 which would make it a prime choice for crypto criminal activity.
- Wider adoption of crypto and crypto related criminal activities by the established crime syndicates as it will provide them with new opportunities and more importantly, more efficient ways of money laundering.
- Governments (primarily U.S.) paying greater attention to the cryptocurrency as a mean to evading sanctions by unfriendly regimes. We already witnessed first such case in 2018 when OFAC sanctioned two bitcoin addresses it claims were related to the perpetrators of the SamSam ransomware attack.
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