Crypto-crime is on the rise, and the cost of dealing with the illicit activity is set to reach billions of dollars by the end of the year. As regulators around the world continue to grapple with the new technology, criminals are finding new ways to abuse it and profit from it.
Cryptocurrency Crime Costs Soar
Cryptocurrency crime is becoming increasingly sophisticated and organized. Criminals are finding new ways to exploit the system and are taking advantage of its decentralized and anonymous nature. The cost of dealing with crypto-related fraud is estimated to reach $4.3 billion by the end of 2021, according to a report by Cipher Trace.
The report also highlights the fact that most of the cryptocurrency crime is related to the theft of digital assets. In 2020, the total amount of stolen digital assets rose to $2.9 billion, up from $1 billion in 2019. This is due to the rise in cybercrime and the increasingly sophisticated methods of theft being used.
The report also shows that money laundering activities make up a significant portion of the reported crypto-related crime. It is estimated that $1.1 billion was laundered using digital currencies in 2020. The lack of transparency in the blockchain and its inability to trace transactions make it the ideal system for criminals to launder money.
Billions Lost to Crypto-Related Fraud
Criminals are also taking advantage of the lack of regulation in the cryptocurrency industry to defraud investors. The report from Cipher Trace shows that $950 million was lost to digital asset investment fraud in 2020. This is the highest amount of money ever lost to investment fraud in the crypto-space.
The most common type of fraud is Ponzi schemes, where investors are promised huge returns on their investments. These schemes are often run by unregulated companies and use the anonymity of the blockchain to hide their identity.
Furthermore, the report also reveals that the number of crypto-related ransomware attacks rose by 200% in 2020. Ransomware attacks are when criminals hijack a system and demand a ransom in exchange for its release. The report estimates that $363 million in ransom payments were made using digital currencies in 2020.
Crypto-crime is a growing menace and it is costing the global economy billions of dollars. Regulators around the world are beginning to take notice and are developing policies to prevent these crimes from happening. However, it is still up to individual users to be aware of the risks associated with digital currencies and take steps to protect themselves.