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Cryptocurrency Theft: A Look at the Risks Associated With Investing

June 1, 2018 Blog

Investing in cryptocurrency comes with many risks, even beyond the risks inherent in investing in a volatile asset. A Bitcoin attorney can provide help to clients in understanding and mitigating those risks in order to maximize the chances that investing in cryptocurrency can produce a positive return on investment.

One of the big risks of investing in Bitcoin or any cryptocurrency is the risk of theft. As CNBC recently reported, around $1.1 billion in cryptocurrency was stolen just in the first half of 2018. There is a substantial amount of theft of cryptocurrencies because it is relatively easy for these virtual currencies to be taken.

Over a Billion Dollars in Cryptocurrency Theft in the First Half of 2018

According to CNBC, the dark web helps unscrupulous thieves and hackers to easily engage in large-scale operations in order to steal a substantial amount of Bitcoin. The dark web is a special part of the Internet that can be accessed only using specific software. Internet users who visit the dark web are anonymous and are untraceable, unlike when regular users sign on and their IP address can easily identify them if necessary.

There are approximately 12,000 marketplaces in the dark web with an estimated 34,000 different offerings related to stealing cryptocurrencies and thieves have access to all of these different tools.

These offerings are primarily malware, and it costs would-be cryptocurrency thieves an average of just $224 to purchase the malware needed to commit the theft. Sometimes, the malware can be priced as low as $1, which means that it costs almost nothing for a hacker to purchase the malware and try to engage in a large-scale cryptocurrency theft.

The Malware is not just cheap to obtain, but it is also easy for unscrupulous people even with minimal or no technology skills to use it to commit cyber-theft, including thefts using ransomware. Those who want to use the malware simply need to be able to get onto the dark web and buy the programs.  In some cases, the malware that is sold to allow thieves to commit their crimes even comes with customer service in case the criminals need help carrying out their heist.

Many people who buy these malware programs are organized cartels or are otherwise part of organized criminal groups. However, because it so simple and easy to access and use the malware to commit the theft, any individual could do it so there’s substantial potential for many cryptocurrency thefts to occur.

Cryptocurrency exchanges are the major target for scammers and hackers who obtain this malware, with around 27% of attacks involving exchanges. Businesses were the second most commonly hacked group and made up 21% of the groups being targeted. In these instances, thieves typically hack the company’s internal system, lock up their computers, and demand that they are paid a ransom in cryptocurrency.

Unfortunately, cryptocurrency isn’t protected or insured by third parties, unlike when a bank gets hacked – so investors face more risk of loss if the exchange they have invested on is hacked. A Bitcoin attorney can provide insight into the risks and the ways that Bitcoin and other cryptocurrency investors can try to protect themselves.