#273
Crypto Criminals
Published:
Feb 02, 2019
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Reports published by Chainalysis and CipherTrace this week demonstrated that security remains a critical concern in crypto. Despite crypto prices falling dramatically in 2018, stolen crypto surged by more than 400% to $1.7b.
Roughly 57% of losses were comprised of thefts from exchanges and wallets, with the remaining 43% comprised of "exit scams" such as fraudulent ICOs or Ponzi schemes.
And despite the infamous shutdown of the Silk Road in 2013, Darknet Activity has continued to climb in recent years – with authorities losing a constant game of whack-a-mole. In 2018, $603m worth of bitcoin were used to trade illicit goods and services - with activity late in the year matching peak levels from early 2017.
So as the technology and regulation mature, why does it remain so difficult to crack down on the crypto criminals?
One key reason is the lack of coordination across exchanges on a KYC (“know your customer”) regime – with many international exchanges remaining unregulated. According to CipherTrade, 97 percent of criminal bitcoin flows through unregulated cryptocurrency exchanges.
Lest we believe that crypto has a unique problem, KYC is a core issue across digital financial services. In an interesting non-crypto example, the smash hit game Fortnite recently came under fire for rampant credit card fraud related to in-game purchases.
So while KYC isn't uniquely a crypto issue, crypto has unfortunately remained a useful tool for criminals to move money and avoid this iconic problem faced in Breaking Bad…
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Crypto Criminals
Cryptocurrency thefts, scams hit $1.7b in 2018: report - Cryptocurrencies stolen from exchanges and scammed from investors surged more than 400% in 2018 to around $1.7b, according to a report from CipherTrace. Read more
Two groups account for $1b in cryptocurrency hacks, new report says- Two groups of highly sophisticated cyber criminals have likely stolen $1b+ in cryptocurrency hacks. Alpha group is “a giant, tightly controlled organization at least partly driven by nonmonetary goals,” and Beta group is “heavily sanctioned organization absolutely focused on the money!” Read more
Industry News
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The death of the fund — and what comes next - Joshua Levin, co-founder of OpenInvest, writes a piece for InvestmentNews about why he thinks mutual funds and ETFs are on the way out. With 80% of investors caring about sustainable investments that are tailored to their interests, he believes the future is about DCIs (dynamic customer indices). Read more
Financings
Acorns - California based investing and savings app has raised $105m in Series E funding from Comcast Ventures, NBCUniversal, Bain Capital, BlackRock, TPG's Rise Fund, and DST. The valuation on the round is $860m, topping Betterment's $700m valuation. Read more
Petal - New York based credit card issuer has raised a $30m Series B led by insider Valar Ventures, with participation of Greyhound Ventures. Read more
Symbiont -New York based distributed ledger and smart contract platform for capital markets has raised $20m in funding led by Nasdaq Ventures, with participation from Citi and Galaxy Digital. Read more
Stripe - San Francisco payment processor API has raised an additional $100 million from Tiger Global, boosting its valuation to $22.5 billion.
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