As cryptocurrency becomes more mainstream, the number of crimes involving digital assets has risen significantly. Hacking exchanges, phishing scams, and money laundering are just some of the ways criminals are exploiting the digital currency market. Hacking exchanges:Hacking cryptocurrency exchanges has become an increasingly popular way for criminals to obtain digital assets. The biggest hack to date happened in January 2018 when hackers stole $534 million worth of NEM from the Japanese cryptocurrency exchange Coincheck. This hack was followed by another attack in September 2018, when hackers stole $60 million worth of cryptocurrency from Zaif, another Japanese exchange.
These hacks are just the tip of the iceberg, with numerous smaller exchanges also targeted by cybercriminals. One of the most common ways hackers infiltrate exchanges is by exploiting vulnerabilities in the exchange’s software. Once they have access to the exchange’s servers, they can steal private keys and gain access to users’ digital wallets. Phishing:Phishing scams are another popular way for criminals to steal cryptocurrency. These scams involve creating fake websites or emails that look like legitimate cryptocurrency exchanges or wallets.
When users enter their login details or private keys on these fake sites, the criminals can steal their digital assets. One of the most high-profile phishing scams occurred in July 2017, when hackers stole $7 million worth of Ether from the cryptocurrency exchange Bithumb. The hackers created a fake website that looked like Bithumb’s login page, and when users entered their login details, the hackers were able to steal their digital assets. Money laundering:Money laundering is the process of concealing the origins of illegally obtained money.
Criminals often use cryptocurrency to launder their proceeds, as it can be difficult to trace the source of digital assets. By transferring cryptocurrency through multiple wallets and exchanges, criminals can make it harder for law enforcement agencies to track their illegal activities. According to a report by Chainalysis, a blockchain analysis company, cryptocurrency-related crime amounted to $10 billion in 2020, with money laundering accounting for 55% of this total. The report also found that over 60% of the funds stolen in 2020 came from just two hacks: the KuCoin hack and the PlusToken scam.
Preventing cryptocurrency crime:To prevent cryptocurrency crime, it’s important for individuals and exchanges to take security seriously. Some steps that can be taken include:Using two-factor authentication: Two-factor authentication can help protect accounts by requiring users to enter a unique code sent to their phone or email before accessing their digital assets. Using cold storage: Cold storage refers to storing digital assets offline, making it harder for hackers to access them. Being cautious of phishing scams: Users should always double-check the URL of cryptocurrency exchange websites and avoid clicking on links in unsolicited emails.
Using reputable exchanges: It’s important to use reputable exchanges with a proven track record of security. Staying informed: Staying up-to-date on the latest security threats and best practices can help individuals and exchanges stay ahead of the criminals. Conclusion:The rise of cryptocurrency has brought with it a rise in cryptocurrency crime. Hacking exchanges, phishing scams, and money laundering are just some of the ways criminals are exploiting the digital currency market. To prevent cryptocurrency crime, individuals and exchanges must take security seriously and stay informed about the latest threats and best practices. As the cryptocurrency market continues to evolve, it’s important to remain vigilant and proactive in preventing digital asset theft.