Cryptocurrency scams have been a major concern for both crypto-investors and owners for years but it may culminate in 2020 due to COVID 19 pandemic crisis. CipherTrace has reported a shocking fact that cryptocurrency scams, fraud, thefts, have already drained $1.4 billion funds in the market. Many researchers also predict the curve would break last year’s record of $ 4.5 billion lost if there are no significant interventions.
Crypto exchanges were the major suspect for 2019’s loss but the coronavirus crisis has widened the scope, target, and methods for this year. From crypto phishing, frauds at the dark market to ransomware, criminals try to capitalize increases of digital asset activities during this pandemic.
Trending Cryptocurrency Scams in 2020
Recognize some of the COVID 19 cryptocurrency scams as shown below:
During COVID 19, people get more familiar with international health institutions like WHO, The Red Cross, or CDCP as they also actively look for relevant information. The COVID 19 scams in the first semester of 2020 use email campaigns to collect personal information and to drive payments with crypto money. They impersonate and mimick those institutions to convince victims.
Dark Market Payments
PCR test kit, swab test kit, chloroquine, vaccines, masks, hazmat suits, and other pandemic related items are fraudulently sold at dark webs. They would request even obligate payment in cryptocurrency for those items. While the market looks legit, the items you’ve purchased might never be shipped or if they are, it would be lost for the real market.
The growing interest in the pandemic-related information gives birth to more COVID 19 apps and sites. Criminals include the virus tracker for mobile devices that will spy or install ransomware to your mobile devices as installed and intercept your synced crypto wallets. The pandemic has increased the number of people to work from their homes that also increase the digital asset movements.
While direct theft and hacks look more advanced, they contribute to crypto loss only by two percent. The rests are dominated by cases of fraud and misappropriations. It’s understandable since exchange platforms have been continuously beefing up their security measures. They could more progressively recognize and deal with recent bitcoin wallet hack attempts. Fewer hackers now can actually breach cryptocurrency exchange with an advanced security system.
One of the biggest and the most recent cryptocurrency scams is the ongoing Wotoken MLM case. It has become a major fraud of cryptocurrency that you might have been familiar with. It’s basically a pyramid scheme but employ advanced algorithm. With 700,000 users and growing, the MLM scheme stole more than $1 billion from the crypto market in 2018 and 2019. CipherTrace argued that Wotoken still has ongoing threats this year.
Wotoken has taken 2 percent of crypto lost in 2020 by far. And it has also been reported that Wotoken would remain a major threat to crypto users and inventors. The MLM scheme keeps around 46,000 Bitcoin, 56,000 Bitcoin Cash, 2.04 Million Ethereum, 292,000 Litecoin, and 684,000 EOS, CipherTrace reported.
Money Laundering Schemes
Even though the fraudulent funds moving in exchanges has dropped by 47% in 2019 as the result of the developing anti-money laundering protocols, the risks still remain in 2020. Less regulated jurisdictions still receive big fund relocation from crypto firms.
These have pushed the Financial Action Task Force(FATF) to establish global counter-terrorism and AML standards. The cross-border exchange-to-exchange has occupied major Bitcoin movement internationally by 74% according to reports. The huge laundered cryptocurrency movements have amplified global economic and even public health crisis. The institutionalization of government programs that drives vulnerability to funding misallocation and corruption has fertilized money laundering on the other side.
Countries need to speed up the regulation not only to support AML or counterterrorism but also to pursue the potential values of cryptocurrency transactions as international remittances alongside with the fiat currency. Slow responses would lead to major loss as seen in the last three years or even worst as the advancing global fraud strategy.
Advancing Crime Strategies
The slow-motion of crypto business regulation contributes to the advancement of crime strategies. Have we mentioned dark webs and exchanges? They might be formerly understood to run different paths, but they actually don’t. They are actually connected proved with massive crypto transfer from darknet wallets to exchange both direct and indirect.
These processes help to mask the source when traced and preserve if not grow fund laundering with cryptocurrency in 2020. The current regulation isn’t only left several steps behind but also fails to identify and to articulate relevant information about these fraud developments.
Bitcoin ATM Scams
This report also highlights the growing transfer from BTC ATMs to high-risk exchanges. While it doesn’t accurately indicate the fraudulent activities but it still keeps the chances as around 8% transfer went directly to masked changers 2019. ATMs could and should be the next target of the regulation or it may develop more exponentially in 2020 due to COVID 19 crisis.
Various cryptocurrency anti-money laundering and crime report have shown us the ongoing crypto frauds in 2020. It’s predicted to be the second-costliest loss of cryptocurrency considering the first five-month evaluation.
The increasing digital asset movements during COVID 19 has widened cryptocurrency scam and fraud scopes. While FATF’s Travel Rule and evolving AML are promising, the slow enforcement by countries preserves the environment for crypto crimes this year.