Alpha and Beta
Chainanalysis calls the two prominent professional criminal groups Alpha and Beta and claims the two are responsible for at least 60 percent of all reported hacks of crypto exchanges. The hacks have netted the two groups about $1 billion in all.
The report says: “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.”
Alpha is described as a “giant, tightly controlled organization partly driven by non-monetary goals” while Beta is less organized and smaller and completely focused on money.
The two organizations operate rather differently
Chainanalysis analyzed the transactions of the two groups and as a result found that Alpha quickly moves it funds after stealing them with an extremely high number of movements of the funds. One hack involved up to 15,000 transfers. Within 30 days Alpha manages to convert up to 75 percent of the stolen cryptocoins into cash.
In contrast the Beta group is slow in transferring the stolen coins into cash taking between 6 and 18 months before turning the stolen coins into cash. When it does decide to cash out it does so through one crypto exchange, cashing out over 50 percent of the stolen coins within days. Once it cashed out about $32 million worth of coins in one go.
Ethereum scams
One part of the report deals with Ethereum scams. The report found that such scams are increasing in number though they are smaller in scale In 2018. However, $36 million of the coin ether were stolen in 2018 more than double the $17 million stolen in 2017.
Theft continues even in a bear market
Theft continues even during a bear market such as last year. Bitcoin lost about 80 percent of its value. Yet the report claims that darknet market activity almost doubled. I presume the thieves simply steal more of a coin.
The report said: “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.”
North Korea accused of hacks
Last October cybersecurity vendor Group IB suggested that a North Korean hacking group, Lazarus, had managed to steal $571 million in 14 different hacks on exchanges since January 2017.
Crime is a small portion of the total cryptocurrency market
The Chainanalysis report notes: “Crime makes up a small subset of a much larger cryptocurrency market, but it remains significant: In 2018, a record-setting amount of crypto crime took place. The types of crypto crime are diverse and increasingly sophisticated, from Ethereum-based scams rising and falling with cryptocurrency prices, to darknet markets showing resilience against market trends, to hacks being carried out by professional organizations with distinct modus operandi. We take a deep dive into three types of crypto crime and the implications for the larger cryptocurrency ecosystem.”
The three types of crypto crime are treated in distinct parts of the report: Darknet Markets; Ethereum Scams; and Hacks.
