Overall decline in cryptocurrency in 2020 – more DeFi thefts and ransomware attacks | 02/21/21

Cryptocurrencies have seen a strong tailwind in the past year. While crypto crime declined overall in 2020, individual criminal trends experienced a boom.

• Crypto crime will decline in 2020
• Ransomware attacks are increasing dramatically
• DeFi affected by increased thefts

 The  year 2020 was a particularly successful one for Bitcoin & Co. In the course of the corona crisis, cyber currencies – with the exception of a break-in in March – steadily improved.

 The  original crypto currency Bitcoin even managed to set a new all-time high, which it could even surpass in the new year. And other digital currencies were also pleased about the brisk influx, which has so far been unbroken.

At the same time, crimes related to Bitcoin & Co. decreased in the past year.

 The  losses caused by theft, hacks or fraud will amount to a whopping sum of 1.9 billion US dollars in 2020; However, this is a year-on-year decrease of 57 percent, as the Reuters news agency reported with reference to data from the crypto company CipherTrace. In 2019, crypto criminals got away with $ 4.5 billion.

Cryptocurrency used less often for criminal activities

Evaluations by the blockchain company Chainalysis also show that cryptocurrencies were used less often for illegal activities in the past year, as CNBC writes. Only 0.34 percent of the crypto transaction volume were illegal activities in 2020. In contrast, this figure was around two percent in the year.

Such illegal activities can include purchases on the Darknet, money laundering or terrorist financing. But also theft, scams and attacks with ransomware belong to it.

Ransomware attacks on the rise

 The  Chainalysis data also show that the latter in particular literally exploded last year. Ransomware is malicious software that hackers use to lock a computer.

 The  person concerned is then asked to pay a ransom – often in the form of Bitcoin or other cyber currency – to unlock the device again. This type of blackmail has seen an increase of 311 percent compared to the previous year.

 The  increased trend towards home office plays into the hands of criminals in particular.

Darknet trade is flourishing

In addition to the increased ransomware attacks, the information from Chainalysis also shows that crypto trading in the Darknet literally spilled out in 2020. In total, crypto transactions worth 1.7 billion US dollars were booked here, which corresponds to an increase of around 30 percent compared to 2019.

 The  Darknet is a part of the Internet that cannot be accessed with conventional browsers and that is dedicated to surfing as anonymously as possible – and thus also offers a cover for illegal activities. Anyone who wants to buy or offer for sale illegal goods and services in the Darknet could choose cryptocurrencies as the payment method, as these also do not allow any conclusions to be drawn about the owner or sender.

More DeFi thefts

CipherTrace’s crypto experts spotted yet another criminal trend over the past year. It is noticeable that there has been a shift from centralized financial institutions to decentralized finance (DeFi) in the case of thieving crimes.

“

 The ft by hacking centralized exchanges continues to decline as these financial institutions mature and implement stronger security measures,” said CipherTrace CEO Dave Jevans in an interview with Reuters.

 The se increased measures are now driving criminals into the still young DeFi sector, as it is not (yet) subject to the same regulation as banks, for example.

As Bitcoin Suisse states on its own website, DeFi is “usually used to describe all applications and companies that offer financial services based on decentralized blockchain technology.” In contrast to conventional banks, loans are granted here via so-called smart contracts, which in turn are enforced using computer code.

 The  value of loans made through DeFi has grown 500 percent from August 2020 to the end of January 2021, according to DeFi Pulse information available to Reuters. Of course, this also gives criminals more options. According to CipherTrace, half of the 2020 crypto thefts were related to DeFi – $ 129 million.

Finanzen.at editors