It’s true that the crypto space is awash with criminal masterminds looking to make a buck off the back of unsuspecting victims. Every year, multiple incidents are reported where fraudsters, hackers, and other thieves make away with huge crypto stashes. According to a new report released by renowned blockchain analytics firm, CipherTrace, the first 5 months of 2020 alone have seen the crypto market lose around $1.4 billion to criminals.
Although $1.4 billion is a huge figure to lose to malicious characters, the good news is that 2020 isn’t as bad as 2019. Upwards of $4.5 billion worth of cryptos were stolen in 2019. Still, 2020 looks to be on track to surpass the $1.7 billion lost in 2017. That will make 2020 the year with second-most funds stolen.
“A Classic Pyramid Scheme”
According to the information uncovered by CipherTrace, the major factor contributing to the $1.4 billion stolen this year can be traced to a single entity: Wotoken. Until a few months ago, Wotoken operated a sophisticated crypto-based pyramid scheme that attracted close to a million users. And then it just collapsed.
John Jefferies, the chief financial analyst at the analytics firm, described Wotoken as “a classic pyramid scheme.” Still, the cryptos stolen from the users are moving around – 292,000 LTC, 684,000 EOS, 2.04 million ETH, 56,000 BCH, and 46,000 BTC.
Point To Note
However, it’s worth noting that the bulk of the funds stolen is due to fraud as opposed to hacking. That means crypto exchanges and people are now more cautious and hackers are finding it harder to steal.
In fact, hacking accounts for just around 2% of the reported funds stolen in 2020 – as detailed by CipherTrace.
Criminals Are Getting Smarter
On the other hand, criminals who have acquired cryptos from dubious means seem to be getting smarter in how to hide the trail.
CipherTrace analyzed the cryptos sent from dark web wallets and noted that a majority of them are first transferred to an interim wallet or location before being spent on the regular network to obscure their original source.