What are crypto-related crimes and how to avoid them

Investors and criminals are getting more interested in cryptocurrencies than ever before. According to a report by Crypto Head, a crypto news media, reports of cryptocurrency crimes have increased by approximately 312% per year since 2016. These crimes can include everything from hackers stealing investors’ coins to people falling for scams related to crypto investments.

Uncovering the Dark Side of Digital Currency

Cryptocurrency, a digital asset revolutionizing the financial world, unfortunately, also opens doors to illicit activities. The Wall Street Journal has shed light on the alarming rise in cryptocurrency crimes, capturing law enforcement’s intensified focus.

From laundering money under the guise of anonymous cryptocurrency transactions to funding terrorism, these digital currencies present new challenges. This article aims to learn about the latest trends in cryptocurrency theft, including high-profile cases like Tornado Cash, where over 100 million dollars were involved.

Utilizing blockchain analytics, authorities are unraveling complex layers of money laundering, human trafficking, and other nefarious activities, as highlighted by the FBI’s crypto crimes unit. Dive into this form of digital underworld and explore the intricate nexus of crime and cryptocurrency.

Crypto crimes – key takeaways

• Reports indicate a 312% annual increase in cryptocurrency crimes since 2016, encompassing theft, scams, and hacks.
• The anonymity and lack of central regulation in cryptocurrencies facilitate money laundering and terrorism financing.
•  Cryptocurrencies are increasingly preferred for ransomware due to their convenience and anonymity.
• Coins like Monero are gaining traction among cybercriminals for their enhanced privacy features.
• Agencies are becoming more skilled at tracking, analyzing, and prosecuting crypto crimes.
• Cryptocurrencies are also being used effectively by law enforcement to track criminals involved in activities like human trafficking.

What is the relation between crime and crypto?

Ransomware is the primary reason for the surging crime rate. It is a convenience, anonymity, and lack of supervision by a central regulatory agency. Due to this, it prefers crypto trading to traditional large-scale blackmail methods.

Analysts consider cryptos as the last and only instrument for ransomware purveyors, as wire transfer and banking regulations are lifted while trading with crypto.

Privacy-oriented coins, like Monero, are getting extremely popular among hacker groups.

Except for ransomware, the crime specter has been occupying decentralized finance for years. EU’s law enforcement agency in 2018 came across billions of USD’s washed through cryptos only in Europe.

The actual crime rate might be even more significant than statistics show. The novelty of cryptocurrency means that some objects might not fully understand the crime or how to report them, as Crypto Head’s study notes. In the United States, the SEC, CFTC, and the IRS are asset regulatory bodies. Their responsibility is to protect victims’ rights. However, their privilege operates only under several circumstances.

Crypto Crime has a Long-Term Impact on Traders

The increased difficulty in tracking down criminal cryptocurrency transactions would drain funds from intelligence agencies, Michael Phelan, the head of the Australian Criminal Intelligence Commission, stated in April. Similarly, the United Kingdom banks might soon have to change the location of extra funds to cover possible losses on high-risk crypto assets.

There are several positive facts regarding crypto crime:

• Criminals only make up a minority of total crypto users;
• Private firms like CipherTrace are working to chase and neutralize crypto crime.
• Law enforcement organizations are expanding more adept at counteracting digital crime.
• Criminal groups moving into cryptocurrency from cash are easier to trace.

Despite the increase of ransomware, criminals make up a small minority of users. The illegal activity made up less than 1% of all transactions and dropped yearly, according to a 2018 report from the Foundation for Defense of Democracies.

A competing study by Oxford Law made in 2018 a much higher percentage of 44%. However, it is only around Bitcoin and does not include the whole cryptocurrency spectrum.

Many high-profile entities in the crypto industry have spoken out against its perceived links to crime.

Using Crypto for Criminal Activities is Geographically Centralized

Law enforcement agencies such as the U.S. Justice Department are developing adept at analyzing, prosecuting, categorizing, and crypto crimes.

Late last year, the Department published an 80+ page report detailing a cryptocurrency enforcement framework. The report is concentrating on the capability to confiscate virtual assets and take down websites.

Crypto is also being used to seize criminals

Ignacio Santoyo, a human trafficker, was seized and arrested after Mexican law enforcement tracked his group’s bitcoin transactions In 2019.

The arrest took place in the wake of the law, requiring crypto trading platforms to report transfers valued at more than 56,000 pesos. It is the same as the requirements of traditional banks.

The new law made it possible for the Financial Intelligence Unit to track Santoyo down. Obviously, it wouldn’t be possible to follow the untrackable cash payments used by human trafficking groups.

What are the most often reported crypto crimes?

Often, reported crypto crimes that include scammers demanding payment in cryptocurrency or sending spontaneous offers to help you make money or increase your holdings, according to the FTC.

FTC agency states that one of the significant signs of a scam is when someone tells you to pay by cryptocurrency.

Thus, avoiding any unsolicited crypto-related offers might help, and it is always wise to research on your own first, read reviews and start trading yourself.

What You Need to Consider Before Buying Bitcoin

We already reviewed that Bitcoin ownership might bring crime. However, besides the crime, there still are several factors you need to consider before getting the digital asset.

First, you need to realize that the money you invest in Bitcoin is unsafe from value fluctuations.

Besides, remember Bitcoin is a volatile investment. If you keen to find a more safe investment with guaranteed returns, Bitcoin or the cryptocurrency generally might not be a perfect choice. Bitcoin price fluctuated between $30,000 and $60,000 only over the past several months.

However, Bitcoin isn’t the only unstable cryptocurrency. Other, even smaller coins might be even more dangerous in terms of stability.

If you intend to own the cryptocurrencies anyway, try to consider experts’ suggestions. Experts recommend to keep any crypto investments to less than 5% of your portfolio. Also, try to make sure you have a robust conventional retirement investment strategy in the first place.

Experts also recommend you have extra emergency funds. Besides, you need to pay out all the high-interest debts before investing in cryptocurrencies.

Conclusion

The world of cryptocurrencies, while offering immense opportunities, also harbors significant risks, particularly in the realm of crypto-related crimes. Investors and enthusiasts must stay vigilant against the backdrop of increasing illicit activities like money laundering, ransomware, and human trafficking financed through cryptocurrency.

As the landscape of digital currencies continues to evolve, staying informed and cautious is key to navigating this dynamic domain.