Cybercriminals going after digital coins had a good 2018, stealing a whopping $1.7 billion in cryptocurrency from exchange services, users, or investors. Different forms of scamming, extortion, hacking, and malware were the main methods used to get the money.
A report shared with BleepingComputer informs that cryptocurrency exchanges and infrastructure lost more than $950 million to hackers, with Korea and Japan being the home to most of the heists.
Exit scams lead the way
Exit scams are the top reason for cryptocurrency losses in 2018, says the report from CipherTrace, a company that offers anti-money laundering and blockchain forensics solutions.
One of the largest scams occurred in April, when Vietnamese cryptocurrency company Modern Tech launched an Initial Coin Offering (ICO) and raised $660 million from about 32,000 individuals. After a while, all operations stopped and the investors were left waiting for their returns.
Another notable scam involves a Vietnamese cryptocurrency mining endeavor called Sky Mining, whose founder and CEO disappeared with assets and mining rigs worth up to $35 million.
Hacking and SIM awapping for cryptocurrency
According to the report, hacking their way to the money was another cause for users to lose digital coins. The attacks targeted either the exchange services or focused directly on high-value users.
“In Japan, hackers pulled off the largest cryptocurrency heist in history, robbing users of a major cryptocurrency exchange of $530 million. This breach was followed in October by a $70 million theft from an exchange in Osaka,” informs the report.
Some cybercriminals turned to the SIM swapping technique to steal a victim’s phone number and thus get access to sensitive information used for two-factor authentication or two-step verification to access exchange accounts or wallets.
One way to achieve this is by bribing an insider at a mobile service provider to associate the victim’s number to another SIM card, says lieutenant John Rose of the Silicon Valley REACT Task Force.
“If you’re working at a mobile phone store and making $12 an hour and suddenly someone offers you $400 to do a single SIM swap, that can
seem like a pretty sweet deal,” said the lieutenant.
By means of SIM swapping, a hacker last year was able to allegedly steal $23.8 million from a cryptocurrency investor.
Other hackers used the same technique against CrowdMachine startup in California and stole its entire coin reserve worth $14 million. Two men were arrested under suspicion of committing the crime.
Although these are examples of large heists, the SIM swapping method is often used against owners with fewer coins.
CipherTrace created a list with the top 10 trending threats targeting cryptocurrency:
1. SIM Swapping: An identity theft technique that takes over a victim's mobile device to steal credentials and break into wallets or exchange accounts to steal cryptocurrency. 2. Crypto Dusting: A new form of blockchain spam that erodes the recipient's reputation by sending cryptocurrency from known money mixers. 3. Sanction Evasion: Nation states using cryptocurrencies has been promoted by the Iranian and Venezuelan governments. 4. Next-Generation Crypto Mixers: Money laundering services that promise to exchange tainted tokens for freshly mined crypto, but in reality, cleanse cryptocurrency through exchanges. 5. Shadow Money Service Businesses: Unlicensed Money Service Businesses (MSBs) banking cryptocurrency without the knowledge of host financial institutions, and thus exposing banks to unknown risk. 6. Datacenter-Scale Crypto Jacking: Takeover attacks that mine for cryptocurrency at a massive scale have been discovered in datacenters, including AWS. 7. Lightning Network Transactions: Enables anonymous bitcoin transactions by going "off-chain," and can now scale to $2,150,000. 8. Decentralized Stable Coins: Stabilized tokens that can be designed for use as private coins. 9. Email Extortion and Bomb Threats: Cyber-extortionists stepped up mass-customized phishing emails campaigns using old passwords and spouse names in 2018. Bomb threat extortion scams demanding bitcoin spiked in December. 10. Crypto Robbing Ransomware: Cyber-extortionists began distributing new malware that empties cryptocurrency wallets and steals private keys while holding user data hostage.
CipherTrace says that the value of digital currency stolen in 2018 was 3.6 times higher than in the previous year.
A quarter-by-quarter comparison shows that the dollar value of the thefts perpetrated in Q4 2018 was lower than in Q3. This is accounted by the general cryptocurrency price drop.