The cryptocurrency ecosystem is still having to deal with its fair share of scammers, fraudsters, cheats and otherwise idiotic players. There were a number of initial coin offering (ICO) scams in the space last year, and 2019 is showing signs of similar activity still occurring, albeit on a smaller scale. However, what is now making an impact on the industry is the number of exit scams found, making CipherTrace dub 2019 the Year of the Exit Scam.
CipherTrace is an established organization that provides detailed analysis and feedback over crypto and blockchain activity. It releases several reports throughout the year and its most recent, the Q2 2019 Cryptocurrency Anti-Money Laundering Report, points out that aggregate losses have reached $4.3 billion this year. Of this amount, hackers stole $125 million in the second quarter, down from $161 million in the first three months of the year. It should be pointed out that the figure doesn’t include the losses suffered from the QuadrigaCX debacle.
However, exit scams are where a lot of investor money is going. $3.1 billion has been stolen through exit scams, with antoher $874 million lost through “misappropriation.” Virtually that entire exit scam amount – $2.9 billion – was reportedly lost when the South Korean crypto exchange PlusToken vanished into thin air. Some of the company’s leaders have since been nabbed by police.
The “Wild West” days of the crypto space are going away, though, and the numbers should continue to dwindle. CipherTrace explains, “All of these illicit funds need to be laundered, but bad actors will have a harder time doing so as tough new Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations passed in 2018 are coming into effect globally over the coming months. For example, in June 2019, the Financial Action Task Force (FATF) advised member nations to begin implementing its ‘Travel Rule,’ which applies to all cryptocurrency transactions over a $1,000 threshold.”
Crime is a part of every industry, and big banks have already been called out on more than a few occasions for engaging in illicit or questionable activity. However, the Bitcoin ecosystem can offer more ways to determine individuals involved in transactions, which is part of the reason the numbers have already slightly fallen. There is still more to be done, but the space is definitely getting better and cleaner.
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