Posted on

Crypto Exchanges Lose $1.2 Bln to Thieves, Fraudsters in Q1 2019: Report

A recent report shows that in the first quarter of 2019 fraudsters and
scammers have already managed to get hold of $1.2 bln in crypto

As per a recent Reuter’s piece, CipherTrace agency, working in the sphere of cybersecurity, reported that losses of crypto in thefts and fraud this year already total over $1 bln. That constitutes 70 percent of all crypto losses suffered by the crypto community last year.

Crypto thefts’ volume rose during the ‘crypto winter’

As per CipherTrace, the overall volume of
crypto stolen in various methods last year totals $1.7 bln. Even the so-called
crypto winter did not prevent scammers from making their profits. On the contrary,
their activity increased even though the market was going down along with
crypto prices and business activity in the blockchain and cryptocurrency sector.

Losses this year so far

So far, in Q1 2019, hackers have stolen $356 mln in crypto from digital exchanges. The brightest example here is New Zealand-based Cryptopia which was hacked several times in succession. Around $851 mln in crypto assets has been lost in frauds and scams.

CipherTrace adds to those figures the crypto frozen in the user-accounts of the Canada-based QuadrigaCX exchange – $134 mln in virtual assets. The reason for that was the sudden death of its CEO, who was the only person with access to the private keys.

The CEO of ChiperTrace, Dave Jevans, believes

“Crypto crime has gotten worse because regulations are still weakly enforced. Europe broadly has not implemented its regulations yet and the cybercriminal community continues to grow.”

He insists that many of these thefts took place outside US where there are hardly any regulations or they have been implemented poorly. The reason for that, he says, is lack of experience and too much greed from the young teams that run these platforms.

Australia also reports massive crypto losses

A recent report by an Australian government agency ACCC says that 2018 was also harsh for this country’s crypto exchanges and users. Despite the crypto market’s decline, the amount of assets lost to hackers and scammers rose by 190 percent compared to 2017 – the year, when the market was enjoying a bull run.

If in 2017, the Australian crypto community lost $2.1 mln in digital coins, then during the bearish 2018 this number rose to $6.1 mln.

The post Crypto Exchanges Lose $1.2 Bln to Thieves, Fraudsters in Q1 2019: Report appeared first on Ethereum World News.

Posted on

Buying Insurance Against Crypto Hacks Could Save Users Millions

Cryptocurrency–While some media outlets continue to slam cryptocurrency over the frequent hacks and overall risk of investing through susceptible exchanges, enterprising insurance companies have seen a solution: offer protection against hacks for just pennies on the dollar.

Particularly for users with large funds stored on exchange, whether through accumulation or the need for a quick avenue to liquidity, insurance provides a peace of mind against the ever present, and increasingly frequent news of platforms being compromised.

As Bloomberg writes, the emerging desire for safeguarding funds on exchanges, particularly as more casual users enter the space of cryptocurrency, is driving more interest towards offering insurance against hacks and other monetary losses:

“according to industry insiders, there’s a hot new business that more and more firms are looking to get into: crypto insurance.”

The murky landscape of cryptocurrency and lack of regulation has thus far kept away major players like AIG from announcing their presence in backing cryptocurrency startups and exchange funds, particularly with high profile episodes like Mt. Gox and the BitGrail lawsuit making regular headlines. In addition, Bloomberg points out the vast amount of greed filling the ICO space, creating a minefield for insurers over what would constitute a scam, theft of user funds, or just poor investment choice.

However, insuring a volatile industry comes at a cost: despite the severe risk underwriters are taking in the event of another Mt. Gox, the improving landscape of exchange security in addition to better industry watch-dogging is leading insurers to bet they can avoid major catastrophe, while charging serious premiums,

The premiums from insuring such risk can be substantial. By some accounts, underwriters can charge a crypto-related company upwards of five times or more than your average business for coverage against loss or theft.

Allianz, a European-based financial services company, has been on the forefront of crypto-based insurance. For the past year, the company has been offering individual coverage on digital-coin theft (such as the kind that could occur through personal hacks or exchange compromises) and has recognized the future of crypto-based insurance. Christian Weishuber, a spokesman for Allianz, had this to say on the issue,

“Insurance for cryptocurrency storage will be a big opportunity. Digital assets are becoming more relevant, important and prevalent on the real economy and we are exploring product and coverage options in this area.”

The next step in the evolution of cryptocurrency insurance, albeit one that comes at significant risk to the underwriter, is in backing crypto-based startups and businesses. While the novelty of insurance backing by cryptocurrency companies has created a lack of standardization across the industry, particularly as underwriters scramble to decide upon a risk/reward-based premium, others fear that companies will use the partnership for over-stated leverage. Investors and consumers may be tricked into believing that a claim of partnership with an insurance group makes all funds on an exchange safe. Or worse: ICOs might begin adopting insurance backings that do little to cover investor funds, while claiming the opposite.

Jackie Quintal, a practice leader for London-based Aon, vocalized the fear for advertising misuse in relation to emerging insurance policies,

“Quite honestly, it’s something insurers are aware of and cautious about too. They don’t want an advertisement to say, ‘We are insured with ABC insurance company’ and for it to be inaccurate or misleading. It’s definitely a concern.”

While giving the option for individual investors to insure their funds is a benefit to the industry, especially given the regular occurrence of exchange hacks, it also neglects the innovation of cryptocurrency to do more in educating users about securing their coins.