In the biggest crypto crime to date, Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, laundered at least $3.6 billion in cryptocurrency in 2016. As of April 2022, hackers have snagged over $1.2 billion in cryptocurrency. The significance of the problem cannot be understated. Some have lost thousands, while others have lost their whole life’s savings in crypto.
Why do people keep buying crypto if it’s such a risky investment? Let’s take a look at the problem and current security solutions.
The Hacking Problem
Without the need for ransomware, a means of negotiating with companies for criminal gain, crypto thieves can steal right from the source. Both individual hackers and state-sponsored hackers from North Korea have attacked investors around the world.
“Because there is no centralized authority that manages Bitcoin, transactions cannot be reversed and mistakes cannot be rectified. Bitcoin balances that are stored in digital wallets can be lost forever if users forget or misplace their passwords,” according to Esward Prasad in an article from Time magazine titled, “The Future of Crypto Is Bright, But Governments Must Help Manage the Risks”.
While some companies reimburse investors who’ve been victimized by cyber theft, it is not guaranteed and often takes months or years to be returned.
Additionally, due to financial transactions using crypto being unmonitored, criminals have free reign to make payments for illegal activities such as human trafficking and drug trafficking without prevention.
Securing Your Crypto
In response to the $3.6 billion cryptocurrency hack, Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said, “Federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system.”
The US government is aware of the issue and seeking means of increasing legal standards to protect investors.
By and large, it is up to the individual to protect their digital assets by thoroughly researching the exchanges you’re looking to make, consulting experts, reading reviews, storing crypto in a digital wallet with high safety standards, utilizing cold wallets (offline), requiring several passwords before purchase, and never disclosing your key (what is used to send and receive crypto) to name a few.
Overall, use your best discretion when purchasing cryptocurrency and limit financial investment as hacking is currently a high-risk factor.