Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The CipherTrace report mentions that ‘exit scams’ have rocked the crypto markets in 2019 alone contributing to a fund loss of a massive $3.1 billion.
We are just in the eighth month of 2019 and a new report from CipherTrace brings some astonishing details. The report talks about crypto crimes, thefts, and exit scams which has swindled massive sums of investors’ money.
According to CipherTrace’s Q2 2019 Cryptocurrency Anti-Money Laundering Report, cryptocurrency loses has crossed a staggering $4.3 billion this year. This massive loss figure includes different crimes like hacking thefts, exit scams, etc. The report states:
“Outright thefts, as well as scams and other misappropriation of funds from cryptocurrency users and exchanges, continued apace, netting criminals and fraudsters approximately $4.3 billion in aggregate for 2019.”
CipherTrace’s previous report states that by the Q1 of 2019, the total loses in crypto crimes stood at $1.2 billion. Thus, it is clear that Q2 saw an escalation and rise in the crypto crimes taking place in the market. The report further states that despite several measures initiated to counter external threats, hackers have successfully managed to dodge the current cybersecurity infrastructure.
The Year of Exit Scams
In its report, CipherTrace clearly mentions that 2019 is the “Year of the Exit Scams”. Reportedly, a massive $3.1 billion funds have been stoled through exits and other $874 million have been siphoned off through misappropriate funds.
In its report, CipherTrace mentions an exit scam from South Korean Exchange PlusToken which involves an alleged pyramid scheme. This scam alone could have cost investors a massive $2.9 billion in lost funds. However, CipherTrace hasn’t confirmed additional details on who pocketed these billion-dollars from the scam.
Darknet marketplace dubbed ‘Wall Street Market’ was also a part of a purported exit scam. The European Authorities have reportedly seized $11 million worth of digital currencies from this marketplace.
The report also mentions the loss of funds from other crypto exchanges like the QuadrigaCX, Bithumb, Bitfinex, Cryptopia, and others.
Regulatory Action On The Roll
With such a growing number of thefts and scams reported on a daily basis, the regulatory involvement in the crypto market will continue to grow simultaneously. CipherTrace also warns that:
“under the much more watchful eyes of government regulators and banks as a tsunami of tough new global anti-money laundering (AML) and counter-terror financing (CTF) regulations will roll over the crypto landscape in the coming year”.
Last month, the Financial Action Task Force (FATF) stated that crypto exchanges should submit user information and data and report any suspicious activities. Besides, the regulators will be re-thinking controls over the security operations and internal business practices of the digital currency exchanges.
Moreover, regulators are now having a strict vigilance on privacy coins which are more difficult to trace and provide fodder to the criminals to launder money across the globe.