Bitcoin prices have fallen significantly over the past year but cryptocurrency is still an extremely lucrative target for cybercriminals. Unfortunately, these aren’t the only threats around, with suddenly-collapsing exchanges and lost wallets contributing to catastrophic losses for investors.
We’ll be discussing the most recent figures on Bitcoin fraud and statistics to shed some light on the state of Bitcoin fraud and security in 2023.
1. The biggest cryptocurrency heist to date was the 2022 Ronin Network hack
For years, 2018’s Coincheck breach was the biggest cryptocurrency hack of all time, with a loss of $470 million. However, it has since been beaten three times, with the 2022 Ronin Nework breach leapfrogging it by almost a third. In total, around $620 million was stolen, which is about the same as the combined GDP of Colorado and Oregon in 2022.
2. Another huge hack was the Mt Gox exchange, which lost $470 million
At its peak, Mt Gox was responsible for 70 percent of bitcoin transactions. A hack took place gradually over several years but was not admitted until 2014. In total, around 850,000 bitcoins were stolen, and even though the value of bitcoin was relatively low, this haul was worth around $470 million at the time. Of course, now the value of the stolen coins is much higher.
3. Influencers increasingly involved in pump and dump schemes
Everyone wishes they’d gotten in at the beginning of Bitcoin, which is why it’s so common to hear people hyping up the next big cryptocurrency. The problem is that, a lot of the time, these are simple pump and schemes designed to net the creators or initial investors money at the expense of those who buy in later.
Bad actors have come to realize that the easiest way to generate a buzz about their coin is to pay an influencer. In 2022 alone, several high-profile personalities including Logan Paul, Ben Phillips, and Ice Poseidon have all been linked to pump and dump grifts. The tide may be turning, though, with the US government officially charging people for these crimes and even issuing fines for promoting crypto without revealing that they were paid to do so.
4. FTX collapses, wiping billions from the crypto market
Crypto exchange FTX collapsed unexpectedly in November 2022, after CoinDesk reported that a large proportion of FTX’s assets comprised of tokens issued by another of the founder’s companies. This caused a run, leading to a liquidity crisis. Shortly after, FTX is hacked, losing almost half a billion dollars.
5. 2021 saw a 19% year-on-year increase in cryptojacking
Cryptojacking uses malware to mine bitcoin or other cryptocurrency on the victim’s device, and the attacker pockets the proceeds. It was predicted that the 2019 demise of Coinhive (then the largest crypto mining operation) would signal the death of cryptojacking.
Unfortunately, according to the 2022 SonicWall Cyber Threat Report, there was a 19 percent year-on-year increase in global cryptojacking attacks in 2021 (following a 23 percent rise in 2020). Of note, March 2021 saw around 12 million attacks, with a global volume of around 97 million cryptojacking attempts.
6. Cryptojacking rose 60% in Europe in 2021
The 2022 SonicWall report breaks things down by region. Interestingly, while Europe saw a 60 percent increase in cryptojacking attempts, nowhere else had such a significant rise. In fact, in the US, there was an increase of just four percent and in Asia, attempts actually fell 37 percent.
7. 2021 cryptojacking attacks on healthcare rose almost 220%
SonicWall also looked at how cryptojacking affects different industries. Healthcare saw an increase of almost 1,400 percent in 2020 and unfortunately, this increased by another 218 percent in 2021.
Government systems are another attractive target. In fact, 2021 saw a huge spike, increasing 709 percent year over year. Educational organizations were hit hard too, but there were predictable spikes during term times, since that’s when these systems have most users, and therefore, the highest chance of having malware installed.
8. £3.5 billion is at stake in lawsuits brought about by claimed bitcoin inventor Craig Wright
Craig Wright is a computer scientist who claims he is the inventor of bitcoin. In February 2021, Wright launched legal actions against the developers of several cryptocurrencies. Those legal actions could be worth a total of £3.5 billion. While the details of the actions are complex, essentially, Wright is taking action against developers over access to hacked addresses containing stolen bitcoin. The trial is expected to go ahead in 2024.
9. Police regularly seizing bitcoin miners from criminals
Mining Bitcoin requires an immense amount of computing power and, therefore, electricity. In 2021 alone, Malaysian police seized almost 2,000 bitcoin mining machines (before crushing them with a steamroller for viral fame). Meanwhile, in the UK, after detecting high amounts of heat coming from a property, officers looking for a cannabis farm stumbled onto a bitcoin mining setup stealing thousands of pounds of electricity.
10. Cryptocurrency hacks and thefts increased almost 40% in 2020
According to research by Trading Platforms UK, cryptocurrency hacks and thefts in 2020 involved $513 million worth of bitcoin and other cryptocurrencies. This was up 38.38 percent compared to 2019. That said, the year with the highest figure was 2018 with $950 million worth of hacks and thefts.
11. Blockchain fraud and misappropriation was valued at almost $1.4 billion in 2020
The Trading Platforms UK report also noted that blockchain fraud and misappropriation declined significantly in 2020. 2019 was a huge year for these crimes and saw them valued at almost $4.5 billion. Still, the $1.387 billion observed in 2020 was no small sum and was almost double the 2018 amount of $750 million.
12. Losses from crypto-related crime rose 79 percent
According to the 2022 Chainanalysis Crypto Crime report, a massive spike in theft and scams led to global increases of 79% in crypto-related crimes. Allegedly, illicit addresses received $14 billion in this one year period, almost twice what they received in 2020.
13. 5.6 million crypto storage apps were downloaded in the first month of 2021
With bitcoin seeing a resurgence in popularity in early 2021, it’s perhaps no surprise that this was accompanied by a sharp increase in the number of downloads of crypto storage apps. 5.6 million such apps were downloaded in January 2021 alone. To put this in perspective, 18.13 million of these apps were downloaded in the whole of 2020.
14. One fraudster robbed over 3,500 victims
According to reports, a Swedish man who pled guilty to wire fraud, securities fraud, and money laundering charges defrauded $16 million in cryptocurrency from at least 3,575 victims.
Roger Mils-Jonas Karlsson was accused of using several aliases and conducting various fictitious schemes, persuading victims to hand over funds in the form of cryptocurrencies.
15. Over 100 people were arrested in the PlusToken Ponzi scheme
The PlusToken cryptocurrency fraud ring originated in South Korea and was advertised as a high-yield investment, with claims of returns up to 18 percent per month. It’s believed the scammers withdrew over $3 billion worth from the accounts of investors in June 2019, prompting an international manhunt.
In July 2020, 109 people were arrested by Chinese authorities for their involvement in the scheme. November 2020 reports suggest that digital assets seized in the crackdown were worth over $4 billion. Top operators of the scam were jailed for up to 11 years in December 2020.
16. Scams are responsible for the majority of cryptocurrency received by illicit entities
According to the Chainalysis Crypto Crime 2022 Report, in 2021, illicit activities accounted for less than 0.2 percent of all crypto transfers. We can see, however, that where money is stolen, it’s most likely to happen via DeFi attacks.
17. Bitcoin is not the coin of choice for money-laundering anymore
Bitcoin used to be the go-to coin for criminals but now that it’s better-known, they’ve moved away from it. This may also be because law enforcement have more experience tracing wallets and getting victims’ money back. In any case, the 20 biggest money-laundering wallets received around 19 percent of all illicit Bitcoin in 2021, whereas they accounted for about 85 percent of all illict Ethereum transfers.
18. Bitcoin scammers launder money through gambling platforms
As with fiat currencies, illicit entities launder bitcoin that’s involved in criminal activity. Chainalysis tells us that one of the most popular avenues for bitcoin laundering by scammers is through DeFi services, followed by centralized exchanges.
19. Scammers are all over the world but concentrated in several countries
Of course, it’s nearly impossible to find out where some scams stem from, but Chainalysis estimates where various crimes originate by analyzing the web traffic of services that receive illicit funds. It found that the top country for cryptocurrency scams to emerge from was the US, followed by South Africa and the UK, with China and Russia rounding out the top five.
20. More than €3 million was stolen in the Ledger phishing scam
Phishing scams don’t make up a huge percentage of bitcoin scams, but the Ledger phishing scam was notable. Ledger provides hardware wallets, devices on which users store cryptocurrency. After user email addresses were leaked in a data breach (disclosed in July 2020), a subsequent October phishing scam targeted customers involved in the breach.
Emails sent to victims contained a link leading to a phishing site that looked like the legitimate Ledger website. In turn, the website contained a link that actually downloaded malware capable of draining the victim’s Ledger wallet. Chainalysis has identified more than €3 million worth of stolen funds related to the scheme.
21. More than half of the 2020 haul was from the KuCoin hack
Chainalysis also notes that a significant portion of stolen funds often results from a single attack. Almost half of the amount stolen in 2018 was from the Coincheck hack and more than half of the 2020 amount resulted from the KuCoin hack.
22. Telegram was ordered to pay $1.2 billion to investors
Telegram’s 2018 ICO was met with skepticism from the get-go, and although there was no admission of wrongdoing, Telegram did end up having to pay investors over $1.2 billion in June 2020. At the same time, a civil penalty of $18.5 million was also imposed. Charges centered around the fact that Telegram did not register its early sale of “Grams” tokens worth $1.7 billion.
23. 20 percent of the existing bitcoin is considered lost
According to Chainalysis, 20 percent of the roughly 18.5 million bitcoin in existence has not moved from its respective addresses in five years or more. It considers this 3.7 million bitcoin (worth around $207 billion at the time of writing) as lost.
And that’s not too difficult to believe when you consider some of the stories circulating. For example, Stefan Thomas, a software developer who is heavily involved in the world of cryptocurrency, is missing a good chunk of coin. For years, he has been trying to figure out the password to his IronKey which holds 7,002 bitcoin (worth around $392 million).
Across the pond in the UK, IT worker James Howells has even tried digging up a landfill site to find his hard drive containing a digital wallet housing 7,500 bitcoins. He threw away the drive back in 2013 when the coins were essentially worthless.
FAQs about Bitcoin fraud, theft, and security
What are some red flags of Bitcoin fraud?
There are several things to look out for to recognize Bitcoin fraud. These include:
- Suspicious or unusual activity on a Bitcoin wallet
- Unexplained or sudden changes in transaction history
- Receiving requests for payment in Bitcoin from unfamiliar or untrust
What is Bitcoin theft?
Bitcoin theft is the unauthorized taking of Bitcoin from a digital wallet. This can happen through several means, including hacking into a Bitcoin exchange or service or simply stealing a user's private key. In either case, the result is the same: the loss of Bitcoin for the victim.
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