New research revealed in a report from Chainalysis, a blockchain analysis software provider, finds that just 2 hacking groups are responsible for the majority of cryptocurrency exchange hacks to date.
The report indicates that these 2 professional criminal organizations are responsible for at least 60% of all publicly reported cryptocurrency exchange hacks to date.
According to the report, the total dollar value stolen during the hacks equates to around $1 billion, with each hack averaging $90 million per hack:
“On average, the hacks we traced from the two prominent hacking groups stole $90 million per hack. The hackers typically move stolen funds through a complex array of wallets and exchanges in an attempt to disguise the funds’ criminal origins.”
Crypto Hacking Groups: Alpha and Beta
The 2 anonymous hacking groups were named Alpha and Beta by Chainalysis. Group Alpha is said to be a giant organization that’s primarily driven by nonmonetary goals. Group Beta is a smaller and less organized organization focused and driven primarily by the money.
According to the report, not only do the criminal groups differ in primary goals and size, but they operate differently as well.
The large group, Alpha, moves their funds very quickly after stealing them, with an extremely high number of transactions– one of their hacks involved up to 15,000 transfers. Also, reported data shows that Alpha converts 75% of their stolen crypto funds to fiat currency within 30 days of the hack.
As for Beta, the smaller and less organized group, they take their time, waiting up to 6 to 18 months before selling their stolen cryptos for cash. Once they decide to cash out, they do so very quickly, selling up to 50% of their funds within days on just one exchange. In one example, Beta cashed $32 million at one go.
Moreover, the report states that these criminals even manage to sell their stolen cryptos on licensed and regulated exchanges, whose anti-money laundering structures have trouble identifying the hacked funds.
Organized Cryptocurrency Crime Is Evolving
In addition to information about these 2 hacking groups, Chainalysis also discovered that cryptocurrency crimes are increasing in general. According to the report, Ethereum scams have been increasing in number, even though they’re smaller in scale.
In 2017, Ethereum-related scams accounted for $17 million in lost funds. In 2018, more than twice the amount was lost, equating to about $36 million. Also, the report found that dark market activity involving crypto nearly doubled in 2018, despite the price of Bitcoin falling over 80%.
Chainalysis is very concerned about the rise of organized cryptocurrency crime, and they are urging crypto market participants to fight back.
“Cryptocurrency crime is evolving to become part of traditional crime, and we think this trend will continue in 2019. Cryptocurrency market participants will need cutting edge technology and investigative analysis to fight back.”
Cryptocurrency Exchange Hacks Will Continue
Apart from the report by Chainalysis, IIB previously reported on the Cryptopia exchange hack, which is 2019’s largest on-going crypto exchange hack thus far. $16 million was reported stolen on January 16, 2019, and an additional $180 thousand was siphoned out on January 28, 2019.
Cryptocurrency exchange hacks continue to happen, and hackers will not stop for as long as they can evade repercussions. Therefore, it’s of vital importance to secure your cryptos as best you can by storing them in safe crypto wallets.
Do you think Alpha or Beta was behind the Cryptopia hack this year? Do you hold the majority of your cryptocurrencies on exchanges? Let us know in the comment section below.