Cryptocurrency exchanges live in perpetual fear of becoming the next high profile hack victim. Posing a constant threat to unsuspecting exchanges and their customers, hackers are a serious problem.
But now, according to a new report, it looks like as much as 60% of all hacks can be traced back to just two groups of sophisticated crypto criminals.
In a report published earlier this week, blockchain analysis software company Chainalysis said there were two “prominent, professional” criminal gangs behind attacks totaling over $1 billion in losses—sufficient to account for 60% of all hacking activity over the reporting period.
The report said the average hack was worth $90 million, with hackers using an elaborate web of wallets and exchanges to cover their tracks.
According to the report, “On average, the hacks we traced from the two prominent hacking groups stole $90 million per hack. The hackers typically move stolen funds through a complex array of wallets and exchanges in an attempt to disguise the funds’ criminal origin.”
The report dubs the two groups Alpha and Beta. Beta is considered more organized, and “partly driven by non-monetary goals,” while Alpha is smaller and less organized, but “absolutely focused on the money,” according to their findings.
Alpha hacks involve a quick conversion to fiat, with the report finding as many as 15,000 individual transfers, and a 75% conversion to fiat rate within 30 days.
By contrast, Beta is a slower mover, and tends to cash out larger positions at a single exchange in one go—with one withdrawal totaling $32 million.
Though smaller in scale than Bitcoin Core (BTC) attacks, Ethereum hacks had reportedly increased significantly in value over the last year. According to Chainalysis experts, “In 2018, only 0.01% of ether was stolen in scams, worth $36 million, double the $17 million take for 2017.”
The report makes for damning reading for the state of the cryptocurrency sector, with hackers continuing to cause problems for exchanges and crypto businesses at all levels. Advising companies to prepare for more attacks in 2019, Chainalysis said market participants needed “cutting edge” technology to cope with the threat.
“Cryptocurrency crime is evolving to become part of traditional crime, and we think this trend will continue in 2019. Cryptocurrency market participants will need cutting edge technology and investigative analysis to fight back,” the report stated.
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