Cryptocurrency Criminals Have Stolen $1.4B in 2020, CipherTrace Reports

  • In the first five months of 2020, cryptocurrency crimes have totalled $1.4 billion
  • CipherTrace published the findings in its June 2020 crypto anti-money laundering and crime report.
  • Malicious “COVID-19-related” Android applications have also been a common form of attack.

Cryptocurrency crimes in the first five months of 2020 have totalled $1.4 billion, indicating that the year 2020 could become the second-costliest year in the history of crypto, behind 2019’s record $4.5 billion, but likely ahead of 2018’s $1.7 billion, a CipherTrace report found.

According to the report, this year’s running total largely comes from a single fraud: Wotoken – A massive Chinese multi-level-marketing scheme that stole $1.09 billion in 2018 and 2019, but only came to light last month.

CipherTrace also reported that Coronavirus-inspired fraud has been one of the most popular forms of cryptocurrency attack as it allowed many criminals to disguise as credible coronavirus-related sources, only to commit fraud or steal money.

The fraud is generally committed by persuading unaware users to leave a “trusted” dark market site and join a messaging platform, where the scammer then convinces the victim to pay crypto in exchange for PPE, medicine, or other in-demand supplies.

The report also noted new dark net markets pop-ups claiming to sell COVID-19 diagnostic tests, secret vaccines, or cures.

“It was a classic pyramid scheme,” John Jeffries, Chief Financial Analyst at CipherTrace, said. Claiming to have a “magic algorithm,” Wotoken grew and grew, passing 715,000 users, until Jeffries said it “collapsed under its own weight.” The scheme’s alleged perpetrators are now on trial in China.

The report identified the following popular email scams:

  • CDC fraudulent email
  • email (steals email credentials)
  • Delayed payment confirmation caused by COVID-19 Email (steals email credentials)
  • Fraudulent Red Cross email
  • WHO fraudulent email

COVID-19 Android applications

Malicious “COVID-19-related” Android applications have also been a common form of attack. The criminals create applications that claim to offer information about the virus, but instead allows the attacker to spy on the user, encrypt the device, and hold it for ransom.

Some of the well-known apps are COVID19 Tracker and (coronaVi2022), the report found.

Bitcoin ATMs

The report also remotely examined US-based bitcoin ATM transactions and found that users sent more funds to high-risk exchanges than low-risk exchanges in 2019. The number of funds sent to exchanges at high risk since the American BATM has experienced significant growth, doubling every year since 2017.

High-risk exchanges are “nefarious exchanges known for facilitating criminal activities and money laundering,” according to the report. While these exchanges aren’t intrinsically criminal, the flow of criminal funds through such exchanges makes that transaction more worrisome, it said.

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