We can safely say that cryptocurrencies had a good year for many reasons. More businesses and governments worldwide accept this new form of payment. Legislations were created to support and regulate it. What’s more, we have even seen big banks with a global outreach embrace cryptocurrencies, which holds fast to the notion that crypto is here to stay. Although the progress is there, a few things are holding back cryptocurrencies from reaching their full potential. One of the biggest problems in this arena is crypto crimes.
Crypto Crimes in 2020
While people from different parts of the world were busy fighting a pandemic, criminals were also hard at work. In the first five months of 2020, it’s recorded that about $1.4B was stolen in sophisticated crypto-related scams. Since trading in cryptocurrency has become a big business, scammers and hackers have also come up with new ways to steal. Last year, crypto crimes amounted to $4.5B in losses for companies. Criminals have taken advantage of the ongoing pandemic to target people and companies. They used ransomware, phishing campaigns, and darknet marketplace fraud. Here are some of the most famous crimes in the cryptocurrency world:
Exchange/ Wallet hacks
Exchanges are a vital component of the cryptocurrency cycle of operations. They help people buy and sell cryptocurrencies. One of the most popular exchanges is Bitmex, which does more than $90B in exchanges every month. While hacking an exchange is not a simple job, several hacker groups have been known to take down a few exchanges for their loot. Crypto wallets, on the other hand, are a bit easier to breakthrough. Their security protocols aren’t that extensive, and also, hot wallets are very susceptible to viruses.
Corruption
Although many countries have laws and mechanisms to eliminate corruption, it still rears its ugly head in many countries today. Cryptocurrency brings on an additional layer of complexity to the party. The use of cryptocurrency and overlapping anonymous companies pose challenges in identifying a transaction. Since the currency is decentralized, it becomes harder to find someone to be answerable for a specific corruption charge.
ICO scams
Cryptocurrency has taken the world by storm, and the cybercriminals know it. Some cryptocurrencies have become very valuable. It’s no wonder why investors want in from the ground to get the best returns on their investments. They use Initial Coin Offerings (ICOs) to dupe contributors of their cash. As many as 50% of the present time, ICOs are scams. Unlike IPOs, ICOs are not regulated. This means that there is no clear framework to bring the culprits to book or recoup investor’s cash. Before dishing out your hard-earned cash for an ICO, perform your due diligence to ensure that everything is legit. This means looking over their White Papers with a professional to see if everything is OK.
Money Laundering
Money laundering scandals marred the cryptocurrency industry for most of its earlier years. Unfortunately, the problem is still here. The goal of money laundering is to hide the true origins of funds. Digital currencies use blockchain technology to verify transactions and keep ledgers of activity. But criminals use anonymity services to hide where the money is coming from and effectively breaking the links on these transactions. After a while, the source of the funds can no longer be established. It’s at this point that the funds can then be used without worrying about the law.
Dealing with the Menace
Everything’s not lost. As cryptocurrencies continue getting popular, several countries worldwide are creating legislation to keep their citizens safe and to make it very difficult for people to break the law using crypto. Some countries, such as the Isle of Man, Australia, and Canada, have amended their laws to cover cryptocurrencies and the relevant institutions under the same law that prevents money laundering and counter-terrorist financing. Other countries have taken it upon themselves to restrict cryptocurrency investments in one way or another. For instance, Algeria, Bolivia, Morocco, Nepal, Pakistan, and Vietnam have banned everything from cryptocurrency. Others, such as Bahrain and Qatar, only prevent their citizens from transacting locally. But they are free to do as they wish when outside the nation. Some countries, on the other hand, do not restrict their citizens from investing in cryptocurrencies. However, they do bar financial institutions within their borders from facilitating cryptocurrency transactions. These countries are Bangladesh, Iran, Thailand, Lithuania, Lesotho, China, and Colombia.
When it comes to ICOs, most countries are leaning towards regulating them. China, Macao, and Pakistan, who have completely banned ICOs. But other countries recognize them as a source of revenue and even taxing them where necessary. Although these efforts are still ongoing, many exchange companies don’t ask for verifiable documents to prove who you are. As such, it’s a lot easier to transact without leaving a trace.
The Future of Cryptocurrency
Although many experts believe that cryptocurrency is only here for a short time, others bet that it will only continue to grow. Although some countries have stringent rules about cryptocurrency, crypto crimes still lurk in the mainstream. As more and more businesses continue to accept cryptocurrency, so will their position in society. Although many people believe that cryptocurrency is the root of darknet scams, its technology can increase transparency in many countries. Since they are created on blockchain technology, every piece of Bitcoin has a complete ledger of every transaction involved. However, law enforcement authorities cannot use this information because it doesn’t show the user’s identity. However, several companies are creating technologies that will help show a clear map of how the money was sent and to whom.
