MENLO PARK, Calif.—2019 is shaping up as the year of the “exit scam,” according to a new study from CipherTrace, a cryptocurrency intelligence firm.
An exit scam is a con game in which an established business stops shipping orders while continuing to receive payment for new orders. Customers that trusted the business don't realize that no orders are being fulfilled until the business has already disappeared.
According to one report, individual vendors often reach a point of reputation maturity whereby they have sold sufficient product to have accumulated both significant reputation and escrowed funds, that many may choose to exit with those funds rather than compete at the higher-volume higher-priced matured product level.
Other Findings
Meanwhile, according to the CipherTrace’s latest Q2 2019 Cryptocurrency Anti-Money Laundering (AML) report, which provides an overview of the major cryptocurrency thefts, scams, and fraud worldwide, criminals and fraudsters netted approximately $4.26 billion for the first six months of the year.
To put that number in perspective, cryptocurrency thefts reached $1.2 billion in the first three months of 2019 and $1.7 billion for the entire 2018, noted Forbes in its analysis.
Although exchanges, wallets, and other cryptocurrency custody services are strengthening their defenses, hackers continue to innovate and outpace even the current state of the art in cybersecurity, the CipherTrace report notes.
Blended Attacks
“For example, many breaches involve blended attacks in which hackers employ multiple techniques—including SIM swapping, phishing, URL hijacking, etc.—against multiple targets to take over user and administrator accounts, which increasingly are pulled off with the assistance of a compromised insider. In the case of SIM Swapping, users cannot receive alerts because once their phone numbers are switched to the hacker’s SIM they suddenly have no voice, email, or SMS service on their phones. As a result, both end-users and the exchange IT staff are unaware of these highly unusual transfers until the thieves have made off with their loot,” Forbes explained.
“Take Binance, for instance. The world’s largest cryptocurrency exchange, headquartered in Malta, lost last May more than $40 million in crypto assets from a cyberattack perpetrated by sophisticated hackers using a lethal cocktail of phishing, viruses and other attack vectors,” Forbes said.