Cybercriminals are stealing cryptocurrencies at an alarming rate, causing an increase in money laundering, because they conceal their digital funds and evade the authorities.
During the first half of 2018, the cryptocurrency theft grew 300%, compared to all of 2017 according to the researchers of the new CipherTrace “Cryptocurrency Anti-Money Laundering Report” for the second quarter of 2018. Criminals launder the digital coins using a series of tools and technologies, including mixers, chain hopping, private coins and gaming sites, among others.
Most of the thefts can be attributed to “old school” cybercriminals, who usually target the financial institutions with phishing, ransomware and malware attacks to steal funds and credit card information, according to Dave Jevans, CEO of the cryptocurrency company CipherTrace.
Their malware is designed to target digital funds in a different way to the traditional malware, and was created by people with deep understanding of virtual currencies and can exploit them in a whole new way. Traditional phishing and full-scale malware attackers have learned, through a trial and error process, how to conceal their illicit online activities. However, all seems to indicate that the newest criminals are smart enough to learn and will be tougher to catch once they do.
How does virtual money laundering works?
The first stage of digital money laundering is called stratification. In conventional money laundering, this would mean buying and reselling pricey assets. In the virtual world, it means putting funds in a cryptocurrency system and moving it around using mixers and private coins. They usually require a fee between 1% and 3% and in recent years they have improved their methods to better conceal the money origin.
Gambling sites usually don’t have a “meet your client” regulation, complicating the authority efforts to trace the money’s origin. Private coins like Zcash and Monero don’t constitute most of the transactions, most of the cybercriminals prefer Bitcoin, but Jevans says most of the attackers are adopting them to fly under the radar.
Regulators are focusing their efforts against money laundering, because virtual coins are being used to back illegal activities. The Office of Foreign Assets Control has a list of individuals, companies, addresses, banking accounts and countries that aren’t allowed to do businesses with the United States, and it’s planning on adding cryptocurrency addresses to the list.
In addition, they are closely studying private coins such as Monero and Zcash and their roles in cybercrimes, and at the same time advising the Congress on additional legal measures. On June 20, the Secret Service informed of the seizure of more than $28 million dollars in digital assets.
By Antonio Menéndez
Sources: Hipertextual y El Imparcial.