The cryptocurrency market may be at the forefront of revolutionizing the financial system – including money transfers, banking, and investments – but it has come under increased risk by bringing together features that cybercriminals find highly attractive.
In its Q4 2017 Cybercrime Report, ThreatMetrix said digital currencies offer opportunities for offenders to engage in fraud, money laundering, and other cybercrimes while remaining anonymous. According to the San Jose, California-based security technology company:
“Cryptocurrency marketplaces need a more accurate way to verify the identity of new customers who open an account in order to prevent the infiltration of criminals…[and] better differentiate between good customers and fraudsters the moment they arrive, and thus see an immediate reduction in fraudulent activity on their platforms.”
Cryptocurrency market under attack
Digital currency marketplaces, created to simplify trading the full range of cryptocurrencies, are reporting a variety of frauds and scamming activities, ThreatMetrix said. The virtual money space has now also become a prime target for attacks on legitimate business transactions.
Citing data from Hacked, the report noted that 10% to 20% of Bitcoins were held by fraudsters. Criminals have used cryptocurrencies to launder money by setting up mule accounts through stolen or synthesized identities. In addition, hackers have been known to attack legitimate accounts to steal and transfer cryptocurrency balances, particularly when their value is at their highest.
South Korea accuses North Korean agents of hacking crypto exchanges
The vulnerability of cryptocurrency exchanges to external threats was highlighted when South Korea became the victim of several successful attacks aimed at stealing digital currencies. The Korea Herald even wrote a strongly-worded editorial in December, accusing agents of the impoverished North Korean regime of the theft.
The editorial read:
“The latest North Korean cyber heists confirm that the rogue regime is shifting its hacking-for-money operation into a higher gear, as it badly needs hard currency in the face of international economic sanctions imposed over its nuclear and missile programs.”
According to South Korean intelligence officers, the North may also be responsible for the attack on Japanese crypto exchange Coincheck. The breach occurred in January and resulted in the theft of about $530 million worth of virtual money.