64% of ransomware funneled through crypto exchanges

64% of ransomware funneled through crypto exchanges

Cryptocurrency exchanges need to take a stronger interest in trying to help clean up the illegal use of their platforms. This is the takeaway from a recent study conducted by blockchain analytics firm Chainalysis, which found that 64% of all ransomware attacks are able to launder their ill-gotten funds through exchanges. This is also another reason why exchange regulations are needed and, if the G20 and the Financial Action Task Force have their way, are coming.

The blockchain intelligence entity has been able to identify 38 different exchanges that have received funds originating from ransomware attacks. The firm didn’t specify the exchanges by name, but indicated that “exchanges are the most popular such services, receiving nearly 50% of the stolen cryptocurrency funds, followed by mixing services (34%) and P2P exchanges (8%).” Chainalysis added that the attacks often utilize simpler cash-out networks, compared to larger exchange hacks, because the hacks usually involve a substantial amount of money taken from the exchange. This leads to greater media coverage and requires the hackers to better hide their tracks.

Ransomware attacks, however, only concentrate on smaller amounts of funds being sent to several different addresses and these attacks don’t receive the same media response or scrutiny, allowing them to take place without serious intervention.

Chainalysis also revealed an interesting trend with how the ransomware attacks are conducted. Previously, they would target a large number of potential victims and order small amounts of money to decrypt files and return computer systems to normal. However, the hackers are now going after targets that control politically or legally sensitive data, which are more likely to pay, and are requesting greater amounts of payment to release the systems. The average amount seen per attack has increased from $6,733 in the last quarter of 2018 to $12,762 in the first quarter of this year.

As is to be expected, Bitcoin Core (BTC) still remains the go-to crypto choice for the thieves. A report released by Coveware, the 2019 Global Ransomware Marketplace, indicated that 98% of all ransomware attacks prefer the top-seeded digital currency.

Chainalysis concludes, “Ransomware perpetrators focus on criminally friendly exchanges such as BTC-e, or conversion services with low KYC (Know Your Customer) requirements. However, even exchanges with strong KYC standards may see ransomware proceeds come through their organizations. As a result, identifying ransomware attackers is a problem for the entire cryptocurrency ecosystem.”

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